Bitcoin and Ethereum Drive Grayscale’s New Crypto ETF Push

Grayscale Investments, a major player in the crypto investment space, has filed an S-3 registration statement with the U.S. Securities and Exchange Commission (SEC). The move aims to convert its existing Digital Large Cap Fund into a publicly traded exchange-traded fund (ETF). 

If approved, this will broaden investor access to a diversified basket of top cryptocurrencies, including Bitcoin, Ethereum, XRP, Solana, and Cardano.

What’s in the Fund?

The Grayscale Digital Large Cap Fund (GDLC) is currently a private investment vehicle accessible only to accredited investors through private placements. At present, the fund's asset allocation leans heavily toward Bitcoin, which makes up 79.4% of its holdings. The remaining assets include:

• Ethereum (10.69%)
• XRP (5.85%)
• Solana (2.92%)
• Cardano (1.14%)

Grayscale added Cardano to the fund in January 2025, replacing Avalanche (AVAX) after an index rebalancing.

The S-3 filing suggests that the fund's structure will largely remain the same, apart from its conversion into a publicly traded ETF. However, some details—including the management fee percentage—are still subject to change.

Why This Filing Matters

If approved, the conversion of GDLC into an ETF will provide retail investors with an easy way to gain exposure to the broader crypto market. Unlike Grayscale’s current private fund model, which restricts access to institutional and high-net-worth investors, an ETF would allow anyone to buy and sell shares on traditional stock exchanges.

Grayscale’s filing states that the fund represents 75% of the total crypto market capitalization, excluding stablecoins and meme coins. This makes it one of the most comprehensive crypto index funds currently in play.

The Race for Crypto ETFs Heats Up

Since the SEC approved the first batch of Bitcoin spot ETFs in January 2024, the demand for crypto-based ETFs has surged. The industry has since witnessed Ethereum spot ETFs gaining approval in May 2024, followed by a hybrid Bitcoin-Ethereum fund shortly after.

Grayscale is not alone in expanding its ETF lineup. Several other asset managers, including Canary Capital, 21Shares, and Bitwise, are actively pursuing crypto investment products. 

Additionally, the planned XRP ETF from an unnamed asset manager is gaining attention, as the ongoing Ripple lawsuit nears resolution—a factor that could drive significant demand for XRP-based investment vehicles.

Regulatory Landscape and Future Outlook

The NYSE Arca exchange previously filed a listing request for the GDLC ETF on October 29, 2024, signaling early institutional interest in the product. The SEC’s latest round of approvals for mixed crypto index ETFs in December 2024—which currently include only Bitcoin and Ethereum—suggests that regulators are gradually warming up to more diversified crypto products.

Despite this, crypto ETFs still face hurdles. The SEC has acknowledged over a dozen new applications, including those seeking to incorporate staking rewards and options trading into fund structures. Regulators remain cautious about altcoin ETFs, given the market's volatility and concerns over compliance.

What’s Next?

Grayscale’s filing represents a significant step toward expanding investor access to crypto index products. If the SEC greenlights the Digital Large Cap ETF, it could pave the way for broader adoption of altcoin ETFs. Additionally, the company’s Avalanche (AVAX) and Polkadot (DOT) ETF filings show that the industry is actively working to create diverse, regulated investment options for institutional and retail investors alike.

With over $600 million in assets under management (AUM), Grayscale’s fund conversion would mark another major milestone in the crypto ETF revolution. The regulatory landscape is shifting. With the SEC easing its stance under President Donald Trump, analysts expect more index crypto ETFs to gain approval soon.