More crypto ETFs coming? A key SEC deadline is one week away
The SEC is expected to rule on Grayscale’s proposal to convert its GDLC Fund to an ETF by July 2
Bloomberg Intelligence analyst James Seyffart | Permissionless IV by Ben Solomon for Blockworks
With capital pouring into spot bitcoin and ether ETFs in recent weeks, a fast-approaching SEC decision could spur the next wave of crypto fund launches.
Though filings for single-asset ETFs have multiplied in recent months, products holding a basket of tokens could be the next to get the regulatory nod.
Specifically, the securities regulator is set to rule on Grayscale Investments’ proposal to convert its Digital Large Cap Fund (GDLC) to an ETF. Its deadline to do so is July 2.
GDLC has about $730 million of assets under management. While more than 90% of the fund’s assets are allocated to bitcoin and ether, it also holds XRP, solana (SOL) and cardano (ADA).
Rival fund manager Bitwise also looks to convert its BITW crypto index fund. And Hashdex is vying to add assets to its Nasdaq Crypto Index US ETF (NCIQ), which currently only holds BTC and ETH.
The SEC could decide that XRP, SOL, ADA, etc. represent such a small amount of the index that it’s going to let the products through, Bloomberg Intelligence analyst James Seyffart said at Blockworks’ Permissionless conference on Tuesday. Or the agency could choose to first develop a comprehensive set of rules.
“If they’re not approved on this first date, it’ll only be because the SEC isn’t ready with a full framework,” Seyffart said.
The SEC gave the greenlight to US spot bitcoin ETFs in January 2024 before then permitting ether ETFs to launch that July.
The BTC offerings, led by BlackRock’s iShares Bitcoin Trust (IBIT), have so far notched $47 billion of net inflows, Farside Investors data shows. The category has seen inflows on each of the last 11 trading days, with $589 million entering the funds on Tuesday — the highest daily total in June.
Ether ETF inflows, which stand at $4 billion, have accelerated recently. The segment has totaled roughly $1 billion of inflows in June alone.
But offering investors broader crypto market exposure is the bigger opportunity, argued Hashdex CIO Samir Kerbage. He previously told Blockworks that his firm ultimately wants to create “the Nasdaq 100 for crypto.”
“When you’re investing only in bitcoin, you’re making a decision to short the crypto market,” Kerbage added at the time.
Read more: Crypto indexes offer ‘biggest opportunity’ as SEC decision looms: Hashdex CIO
Last month, Grayscale ETF head David LaValle said on Nate Geraci’s Crypto Prime podcast that he expects a multi-token offering will be the next crypto ETF to launch.
“We have been having good conversations with the NYSE and with the SEC to get to a place where we think we can bring that product to market in an exchange-traded product wrapper.”
The SEC is also considering single-asset spot crypto ETFs focused on litecoin, solana, XRP, dogecoin, cardano and others. The agency asked prospective Solana ETF issuers to amend S-1 forms earlier this month, sources told Blockworks.
Bloomberg Intelligence analysts have said they expect these single-asset products to be approved by the end of the year. The SEC’s deadline to rule on a number of those doesn’t come until autumn.
SEC commissioner Hester Peirce has asked for patience on crypto-related progress, including in the ETF arena. She noted during a Trillions podcast last month that a comment letter from an exchange recommended “generic listing standards” for crypto ETFs.
“That is a request that really resonates with me too, so I think there’s a lot of work to do and we have to think about how to do it most efficiently,” Peirce explained.
Van Buren Capital general partner Scott Johnsson said on X that because the proposed crypto index products have a more undefined universe of allocations, the SEC could adopt a general rule instead of a case-by-case rule application.
He told Blockworks: “Once the basket products are approved, [it] should be a straightforward application to single-asset spot products like SOL.”
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