Grayscale’s crypto ETF approval signals big changes in the market

Grayscale, a major player in the cryptocurrency investment world, has received approval from the United States Securities and Exchange Commission (SEC) to turn its Digital Large-Cap Fund into an exchange-traded fund (ETF).

This is a big step for the crypto market, as it opens the door for more investors to access digital assets in a regulated and easier way.

This new ETF will trade on the New York Stock Exchange Arca. It will follow the performance of the five largest cryptocurrencies based on market value. 

The fund’s holdings include Bitcoin ($BTC), which takes up the largest portion at 80.2%. Ethereum ($ETH) makes up 11.3%, XRP ($XRP) holds 4.8%, Solana ($SOL) has 2.7%, and Cardano ($ADA) makes up 0.81%.

Grayscale said the fund was managing around $775 million in assets by the end of June. This approval marks the first time a fund like this, made up of multiple cryptocurrencies, has been allowed to trade like a regular stock in the US. 

Until now, Grayscale offered crypto trusts that investors could buy shares in, but those came with limits. For example, investors couldn’t easily sell their shares, and the value of the trust often traded above or below the actual value of the crypto it held. 

These issues gave some traders chances to profit by buying or selling at the right time. But as Grayscale changes these trusts into ETFs, those price gaps are closing.

“The ETF aims to track the prices of the underlying crypto assets, minus any costs and liabilities”, Grayscale said in a statement.

An ETF is a financial product that lets investors gain exposure to assets like stocks or, in this case, cryptocurrencies. It trades on stock exchanges and allows people to invest without directly owning the assets themselves. 

For crypto ETFs, this means people don’t need a crypto wallet or an account on a crypto exchange to gain access to the market. Instead, they can buy and sell shares of the ETF just like they would a stock.

Grayscale’s win didn’t come easily. The company had tried to turn its Bitcoin trust into an ETF before, but the SEC denied the request. That decision led to a legal battle in 2022. 

After more than a year in court, a federal judge ruled in August 2023 that the SEC’s denial was “arbitrary and capricious”. That ruling gave Grayscale the chance to move forward.

Now, Grayscale’s Bitcoin ETF has the highest expense ratio in the market at 1.5%. But it’s also one of the top revenue-generating Bitcoin products available.

Even with the good news, the broader crypto market remained cautious. As of the latest figures from CoinMarketCap, Bitcoin is priced at $106,280, down 0.74%. Ethereum stands at $2,435 with a 1.66% drop. XRP and Cardano have also dipped, falling by 1.92% and 2.60% respectively. 

Some traders are nervous about upcoming trade tariff updates, with President Donald Trump confirming that tariffs won’t be delayed. This has caused concerns about possible trade tensions, which could affect the crypto market in the days ahead.

SEC looks at new, faster path for crypto ETF approvals

As Grayscale celebrates its ETF approval, there are signs that the SEC may soon change how it handles other crypto ETF applications. 

Right now, ETF issuers need to file a form known as 19b-4, which starts a long and often complex process. This form must be reviewed and approved before a fund can be listed on an exchange.

But according to crypto reporter, Eleanor Terrett, the SEC is thinking about allowing companies to use a different form – the S-1 registration –  instead. This form is usually used for companies going public. 

Under this approach, if the SEC doesn’t raise any objections within 75 days of receiving the S-1, the ETF would automatically be approved.

This would be a major change. It could save companies time and money by avoiding the long back-and-forth talks that are currently required.

The SEC hasn’t confirmed this new plan, and there are still questions about how it would work. It’s not clear which cryptocurrencies would be eligible, or what rules would apply. Even so, many in the industry see it as a positive sign.

Bloomberg ETF analyst, James Seyffart, said that while delays in this space are common, a move to a simpler system could change the way crypto products are approved in the US. “This kind of simplified process could mark a new phase in how these products are viewed”, he explained.

The SEC has already made a move in this direction. It recently approved the REX Shares Solana ETF, also known as STAK. This is the first crypto ETF in the US to include staking rewards – extra earnings that come from helping to maintain the Solana network. 

This approval shows that the SEC is becoming more open to different types of crypto investment products.

Several other ETFs are still waiting for approval. These include funds based on Litecoin ($LTC), Dogecoin ($DOGE), XRP, and Ethereum. Some of these could get a decision by October this year, while others will be reviewed later in 2025.

Another firm, Bitwise, is hoping to launch its own fund, called the Bitwise 10 Crypto Index Fund. It would include a wider mix of cryptocurrencies, giving investors broader exposure. 

The SEC has not given a timeline for this decision, but interest in such diversified ETFs is clearly growing.

A push for new rules and broader access to crypto

The SEC is not just thinking about individual ETF approvals – it’s also working on bigger changes to how crypto ETFs are listed in general. 

The goal is to create a single standard that would apply to all crypto ETFs. This could make the process simpler and more consistent.

According to Bloomberg’s Eric Balchunas, this could have a big impact. He said that approval chances for top cryptocurrencies like Solana, XRP, and Litecoin could now be as high as 95%. 

“We think the standards might be loose enough that most of the top 50 coins could be ETF-able”, Balchunas said.

The SEC is also working closely with major stock exchanges like Nasdaq to build these standards. Nasdaq has recently submitted a proposal urging the SEC to move faster with ETF approvals. The proposal reflects the rising demand from the market for clarity and speed.

This change could benefit both asset managers and investors. It would lower costs, reduce delays, and open the door for more institutions to enter the market.

On 1 July, the SEC published official guidance for crypto exchange-traded product (ETP) issuers. This guidance outlines what information companies must include in their filings. 

It covers key areas like how to calculate net asset value (NAV), how to choose price benchmarks, how to handle custody, and how to avoid conflicts of interest.

Under US law, issuers of crypto ETPs must register their products under the Securities Act of 1933 and the Securities Exchange Act of 1934. They must also report any suspicious activity, which helps reduce risk and protect investors.

The popularity of token-based ETPs is growing fast. As large investment firms put more money into spot Bitcoin ETFs, the SEC is working to keep up by offering clearer rules.

Ethereum ETFs have already attracted over $2.28 billion, showing strong demand even before staking features are added. Grayscale’s own Ethereum staking proposal is still under review, with a decision expected later in 2025.

As more crypto ETFs are approved, the hope is that these products will become part of mainstream investing. 

The SEC’s changing attitude suggests that regulators are slowly becoming more comfortable with crypto – at least when it is offered in a structured and well-regulated format.

While there’s still a long way to go, every approval helps move the market forward. For now, the approval of Grayscale’s ETF stands as an important moment. It shows that crypto investing is starting to become more accessible and trusted. 

And with more applications in the pipeline, the market is preparing for what could be the next big wave in crypto finance.