The Securities and Exchange Commission (SEC) is expected to rule on Grayscale’s application to convert their Bitcoin Trust into a multi-coin exchange-traded fund (ETF). They should announce their ruling by July 2. This decision has been one of the most eagerly awaited by the market. The ETF we’ve proposed has Bitcoin, Ethereum, XRP, ADA and SOL all in it. While one fund isn’t likely to cause the altcoin season itself, it could open the floodgates for even more altcoin spot ETFs in the United States.
The proposed ETF would be closely based on the Grayscale Digital Large Cap (GDLC) fund. This fund has more than $762 million in assets under management today. The fund is currently mostly invested in Bitcoin and Ether. GDLC currently trades in the private market.
SEC's Decision Looms Over Grayscale's ETF
Grayscale’s application is currently in the midst of a highly scrutinized, reviewing process. The Regents’ application was deemed complete, so the SEC’s final decision must be made by July 2. The markets continue to be jittery while awaiting the final result. Bloomberg ETF analysts recently projected a 95% probability for approval of Grayscale’s GDLC spot ETF.
If granted, Grayscale’s product will be the first ETF of its kind available in the U.S. Specifically, it will put the best altcoins in a basket with Bitcoin and Ethereum. That would be a game-changer for investors looking for some diversified exposure to the booming cryptocurrency market.
Broad Implications for Altcoin ETFs
As of today, Grayscale’s ETF application is now inclusive of XRP, ADA and SOL. This is an extremely significant development for these altcoins. Whether or not the addition of these altcoins would attract more investors and further liquidity remains to be seen.
While the approval of Grayscale’s ETF is certainly a step forward, it may be a catalyst for future altcoin spot ETFs entering the U.S. market. Other ETF firms like Franklin Templeton and 21Shares have filed to bring single-asset spot ETFs to market. This is a strong signal of market demand for more varied cryptocurrency investment products that are made available to mainstream investors.
Market Anticipation and Potential Impact
The agency’s expected approval of Grayscale’s ETF later this month remains a monumental and watershed moment for the late 2023 cryptocurrency industry. Roberts predicted that approval would result in greater institutional investment and more retail investment into altcoins. It would truly further legitimize the asset class.
A rejection would hurt industry optimism and likely postpone the growth of a potential altcoin ETF market. The implications of this regulatory ruling will undoubtedly have an ANC outcome across the entire crypto ecosystem.
