Grayscale ETF Tracking XRP, Solana and Cardano to Hit Wall Street After SEC Pause
News Summary
The U.S. Securities and Exchange Commission (SEC) has approved Grayscale’s Digital Large Cap Fund (GDLC) for conversion into an ETF and subsequent listing and trading on the New York Stock Exchange. The fund tracks the prices of Bitcoin, Ethereum, Solana, XRP, and Cardano, with Bitcoin and Ethereum comprising the majority of its weighting, while XRP, Solana, and Cardano account for smaller proportions. This development follows the SEC lifting an indefinite pause from July and approving generic listing standards for commodity-based products. Concurrently, Dogecoin and XRP ETFs from Rex Shares and Osprey Funds have also commenced trading. GDLC is expected to begin trading on Friday. Grayscale CEO Peter Mintzberg thanked the SEC for its efforts in bringing regulatory clarity to the industry. This approval comes after Grayscale’s legal victory against the SEC, which ultimately led to the approval of spot Bitcoin ETFs in the U.S. Analysts note that the SEC's new rules for commodity-based products align with the crux of Grayscale’s lawsuit, requiring assets to have futures contracts trading on U.S. venues that monitor for fraud and market manipulation. Coinbase's derivatives arm offers futures contracts for 12 cryptocurrencies, including XRP, Solana, and Dogecoin, potentially laying the groundwork for future ETF approvals. Industry experts view the introduction of diversified crypto ETPs as the next logical step to ensure Americans can invest in crypto.
Background
Grayscale and the U.S. Securities and Exchange Commission (SEC) have a history of legal disputes. Previously, the SEC repeatedly denied Grayscale's applications to convert its flagship Bitcoin Trust into a spot ETF, citing concerns over market manipulation and insufficient investor protection. During the Biden administration, Grayscale sued the SEC and ultimately won in court, with the decision deeming the SEC's rejection of Grayscale's application as "arbitrary and capricious." This landmark ruling paved the way for the approval of the first spot Bitcoin ETFs in the U.S., signaling a significant shift in cryptocurrency regulatory attitudes. Donald J. Trump, the incumbent U.S. President re-elected in November 2024, leads an administration generally perceived to favor deregulation and market innovation. Against this backdrop, the SEC's approval of diversified cryptocurrency ETFs and the clarification of generic listing standards for commodity-based products reflect the regulator's ongoing evolution in adapting to the rapidly developing digital asset market.
In-Depth AI Insights
What strategic implications does the SEC's approval of a multi-asset crypto ETF signal for broader crypto adoption and regulatory posture under the Trump administration? This move marks a significant step towards the maturation and institutionalization of the crypto market. It suggests the SEC, likely influenced by previous legal defeats and the current administration's (Trump's) probable pro-innovation stance (though not explicitly stated for crypto, Trump's general deregulatory approach could extend here), is moving towards pragmatic regulation. This could unlock substantial capital from traditional finance, viewing crypto as a legitimate asset class. It also implies the U.S. is proactively seeking to maintain leadership in the global digital asset space, rather than ceding innovation to other jurisdictions. How might the SEC's reliance on "commodity-based product" rules and the requirement for futures contracts on U.S. venues reshape the competitive landscape for crypto exchanges and asset managers? - This framework creates a significant advantage for exchanges like Coinbase that offer regulated futures contracts for a broader range of cryptocurrencies. It could incentivize other platforms to develop similar offerings or partner with existing ones, consolidating liquidity and potentially increasing regulatory scrutiny on those providing the underlying futures. - For asset managers, it means they must align their products with this specific regulatory pathway, favoring those with robust legal and compliance teams. Smaller or nascent players might face higher barriers to entry, while larger, established financial institutions can leverage their infrastructure and expertise. Beyond "investor choice," what underlying economic or geopolitical factors might be driving this accelerated regulatory approval for diversified crypto investment products? - The U.S. might be positioning itself as a leader in the global digital asset space, especially as other major economies explore Central Bank Digital Currencies (CBDCs) or regulated crypto markets. This could be a strategic move to retain financial innovation and capital within its borders, rather than losing it to more permissive jurisdictions. - Furthermore, with ongoing inflation concerns and global economic uncertainty, allowing more diversified crypto investment products could be seen as offering alternative investment avenues, attracting and retaining domestic and international capital wary of traditional asset classes. This could also be perceived as a response to growing voter interest, particularly among younger generations, in cryptocurrencies.