Grayscale Wins SEC Approval to Launch New Crypto ETF

The fund tracks the top five cryptocurrencies, with Bitcoin dominating the portfolio. This milestone happened amid broader shifts in the regulatory landscape, especially as the SEC is reportedly exploring a more simplified listing process for crypto ETFs. This could potentially allow issuers to skip the lengthy 19b-4 application in favor of a faster S-1 filing. Analysts also raised the odds of approval for Solana, XRP, and Litecoin spot ETFs to 95%, with decisions expected by October. Bloomberg experts also expat a near-term green light for a basket-based crypto ETF and elevated approval chances for other altcoins like Dogecoin and Cardano.Overall, the SEC’s evolving stance could be the start of a new era of crypto investment access through traditional markets. Grayscale Gets ETF Nod Grayscale secured approval from the US Securities and Exchange Commission (SEC) to convert its Digital Large-Cap Fund into an exchange-traded fund (ETF). The fund is composed of the five largest cryptocurrencies by market capitalization according to the CoinDesk Five Index. Bitcoin (BTC) holds the dominant share at 80.2%, followed by Ethereum (ETH) at 11.3%. Solana (SOL) makes up 2.7%, XRP accounts for over 4.8%, and Cardano’s ADA holds a 0.81% weighting. A crypto ETF is a type of investment fund that tracks the price of one or more cryptocurrencies and trades on traditional stock exchanges, just like stocks. Instead of buying and holding the actual crypto, investors can gain exposure to its price movements through the ETF. Some ETFs hold the cryptocurrencies directly (spot ETFs), while others track futures contracts or indexes. Crypto ETFs make it easier and safer for traditional investors to access the crypto market without needing a crypto wallet or exchange account. Approval from the SEC Historically, Grayscale’s crypto trusts offered investors arbitrage opportunities by exploiting the premium or discount to the fund’s net asset value (NAV), largely due to their lock-up periods and the absence of in-kind redemptions. However, as the firm continues to convert these trusts into ETFs, such profit windows have gradually closed. According to Grayscale, the goal of the newly approved ETF is for its share value to track the weighted prices of the underlying digital assets, minus any expenses and liabilities. Grayscale is known for pioneering crypto investment vehicles, and provided a gateway for traditional investors to gain digital asset exposure without directly holding cryptocurrencies. This conversion is a turning point for both the firm and the broader industry as it reflects a trend toward more regulatory maturity and mainstream acceptance. The company’s efforts to convert its Bitcoin trust into an ETF were initially blocked by the SEC, which started a legal battle that began in June of 2022. After more than a year, a federal judge sided with Grayscale in August of 2023 by declaring the SEC’s denial “arbitrary and capricious.” This victory allowed Grayscale to proceed with its ETF plans. Today, its Bitcoin ETF has the highest expense ratio on the market at 1.5%, but also ranks as the leading revenue-generating Bitcoin investment product. SEC Eyes Faster Crypto ETF Process The United States SEC is also reportedly considering a streamlined listing process for crypto ETFs. This could significantly reduce the time and complexity involved in bringing these products to market. According to crypto journalist Eleanor Terrett , the SEC may allow ETF issuers to bypass the traditional 19b-4 application—which is a form that currently must be submitted before listing a financial product on a public exchange. Instead, issuers would file a form S-1, which initiates the registration process. After a 75-day review period, if the SEC does not raise objections, the issuer could proceed to list the ETF without the usual back-and-forth negotiations with regulators. This potential change could be a huge step in modernizing the SEC’s approach to crypto products and improving efficiency in the listing process. While the proposed structure could drastically reduce approval timelines and regulatory friction, details about eligibility criteria for the cryptocurrencies that might qualify are still unclear. The lack of specificity on which digital assets could be fast-tracked under the new system leaves room for speculation and continued lobbying from fund managers and industry participants eager to see a broader range of crypto ETFs approved. As it stands, the SEC has not confirmed these changes, and ETF issuers are still awaiting formal clarification. The conversation around ETF innovation took place at a time when the SEC already approved the first-ever staked crypto ETF in the US. The REX Shares Solana ETF (STAK) recently received the green light, and incorporates staking rewards into its investment model. This approval could pave the way for other altcoin and staking-enabled ETFs, especially as the SEC now faces a wave of pending applications involving Litecoin, Dogecoin, Solana, XRP, and Ethereum. According to Bloomberg ETF analyst James Seyffart , these proposals face final deadlines later in 2025, with some potentially reaching a decision as early as October. If the SEC moves forward with the simplified listing process, it could unlock a whole new era of crypto investment vehicles. Analysts Up Altcoin ETF Approval Odds Meanwhile, analysts raised the likelihood of SEC approval for Solana, XRP, and Litecoin spot ETFs to 95%. Bloomberg ETF experts Eric Balchunas and James Seyffart shared the updated forecast in a post on X , and pointed to the increasing momentum and regulatory developments that could lead to a wave of approvals in the second half of 2025. The same 95% probability was also assigned to the potential approval of a spot ETF tracking a basket or index of crypto assets, which could be granted as early as this week. While the final decision on the Solana, XRP, and Litecoin ETFs is expected by October, optimism continues to build across the altcoin ETF landscape. Other cryptocurrencies are also in the mix, with analysts assigning a 90% approval probability to spot ETFs for Dogecoin, Cardano, Polkadot, Hedera, and Avalanche. These decisions are slated for the fourth quarter.. More niche projects like Sui and Tron have lower chances of approval in the near term, with odds at 60% and 50%, respectively, for the ETFs filed by Canary Capital. These figures suggest that while the mainstream altcoins may soon achieve ETF status, lesser-known tokens face a more uncertain regulatory path. On the other hand the SEC’s hesitancy around staking is still very evident, especially after it delayed its decision on whether the Bitwise spot Ether ETF could include staking features. The regulator also postponed its decision on approving the Osprey Bitcoin Trust for trading. Despite this cautious approach, the wave of upcoming ETF approvals could be the start of a transformative period for altcoin exposure in traditional financial markets.

Source: Coinpaper