Grayscale Seeks SEC Approval for New Cryptocurrency ETFs
Grayscale, a prominent player in the digital asset management sector, has reportedly submitted various documents to the U.S. Securities and Exchange Commission (SEC) to gain approval for exchange-traded funds (ETFs) linked to the performance of Bitcoin Cash, Litecoin, and Hedera. The submission includes crucial filings such as the S-1 and S-3, as well as other pertinent documents. This move aims to transition Grayscale’s existing closed-end trusts for these cryptocurrencies into ETFs, which are expected to be primarily listed on NYSE Arca or Nasdaq. This is not Grayscale’s first attempt at this strategy; in 2024, the firm successfully converted its Bitcoin and Ethereum trusts into exchange-traded products.
Crypto Firms Pursue SEC’s Approval for Altcoin ETFs
In relation to Grayscale’s application for a Litecoin ETF, the S-3 filing indicates that the prospectus is contingent upon the SEC either approving the 19b-4 application or establishing universal listing regulations that would allow the Trust’s shares to be listed on NYSE Arca. This initiative reflects a broader trend among cryptocurrency companies seeking regulatory approval for ETFs associated with alternative coins, including popular assets like Dogecoin and XRP. Notably, on September 9, the SEC postponed its decision regarding Bitwise’s spot Dogecoin ETF alongside Grayscale’s spot Hedera ETF.
Grayscale Bitcoin Cash Trust Shows Strong Performance
On the other hand, Grayscale’s Bitcoin Cash trust has shown impressive performance metrics. According to the filing, the net asset value surpassed $202 million, with shares valued at $4.31 each as of June 30. It is essential to recognize the fundamental differences between a closed-end trust and an ETF; the former can trade at prices above or below its net asset value, while the latter is designed to buy and sell assets based on market demand. ETFs also feature an open-end structure that allows for the creation and redemption of shares to keep prices aligned with the net asset value.
Grayscale’s Legal Battle with the SEC
Previously, Grayscale initiated legal action against the SEC after the commission rejected its proposal to convert its trust. Analysts believe this lawsuit could influence the SEC’s willingness to approve Bitcoin and Ethereum ETFs for trading within the U.S. Recent data indicates that since launching in the U.S. in January 2024, spot Bitcoin ETFs have achieved record trading volumes, exceeding $1.2 trillion.
SEC Delays Approval for Bitwise’s Dogecoin ETF
In a separate development, REX Shares and Osprey Funds were reportedly preparing to introduce their Dogecoin ETF this week. However, on September 9, the SEC delayed its decision regarding Bitwise’s Dogecoin ETF proposal. The commission stated that the delay was necessary to allow additional time to assess whether to approve or reject a proposed rule change that would enable Bitwise to list a meme coin ETF. Notably, Bitwise’s DOGE fund has faced similar delays in the past, including a postponement in June. In contrast, REX Shares and Osprey Funds’ Dogecoin ETF is set to begin trading on September 11, having adopted a distinct strategy for its listing. Analyst Eric Balchunas remarked on social media that this launch marks the beginning of a new era for meme coin ETFs, despite being governed by the 40 Act. He also suggested that this could be the first-ever U.S. ETF to include an asset lacking practical utility.
