SEC Acknowledges Grayscale Request to Convert Its GDLC Fund Containing XRP to an ETF

XRP moves closer to having a basket spot ETF as the U.S. SEC acknowledges Grayscale’s request to convert its Digital Large Cap Fund (GDLC) into an ETF. 

The securities regulator recently confirmed that it received NYSE Arca’s proposed rule change, seeking to list and trade Grayscale’s multi-coin fund shares. According to the notice, NYSE submitted the filing under Section 19(b)(1) of the 1934 Securities Exchange Act and Rule 19b-4.

For context, both rules allow self-regulatory organizations like NYSE to propose rule changes as reflected in the firm’s request to list and trade shares of Grayscale’s GDLC. The rationale behind the notice is for informational purposes and to solicit public comments regarding the proposed rule change.

Nate Geraci, President of the ETF Store, shared the SEC notice yesterday, suggesting that the timeline for the fund’s approval has begun. If approved, Grayscale’s GDLC would become the first multi-fund spot crypto ETF in the United States. 

SEC has formally acknowledged filing to convert Grayscale Digital Large Cap Fund (GDLC) into an ETF…

GDLC holds approx 77% btc, 17% eth, & remainder in sol, xrp, & avax.

SEC now soliciting public comments & decision clock starts ticking. pic.twitter.com/5zl6vHmyKo

— Nate Geraci (@NateGeraci) October 30, 2024

Grayscale GDLC 

Grayscale officially introduced the Digital Large Cap Fund on February 1, 2018. The fund features a basket of assets such as Bitcoin (BTC), Ethereum (ETH), Solana (SOL), XRP (XRP), and Avalanche (AVAX).

At press time, the fund boasts a total asset under management (AUM) of $558.84 million. BTC, ETH, SOL, XRP, and AVAX account for 76.26%, 17.20%, 4.38%, 1.59%, and 0.57% of GDLC’s valuation, respectively.

Potential Impact of GDLC ETF Approval on XRP 

Although XRP commands a minimal percentage of GDLC’s valuation, the fund’s approval for an ETF could attract institutional capital into the XRP ecosystem. It could also improve the likelihood of approval for other spot-based XRP ETF filings. 

As reported earlier, Canary Capitals and Bitwise seek to launch spot ETFs exclusively tied to XRP. Both firms submitted their applications to the SEC earlier this month.

However, the regulator has not acknowledged any of the filings though they were submitted before the Grayscale GDLC conversion request. This delay is expected and is likely due to the SEC v. Ripple lawsuit. The parties aim to overturn a district court ruling relating to Ripple’s XRP transactions and have submitted their pre-arguments.

Despite the speculation surrounding the potential launch of XRP ETFs, Ripple CEO Brad Garlinghouse remains confident that the SEC will eventually approve the funds.