Grayscale has recently made significant strides in the cryptocurrency investment arena by submitting registration statements to the U.S. Securities and Exchange Commission (SEC) for a set of newly planned exchange-traded funds (ETFs) concentrated on Litecoin (LTC), Hedera (HBAR), and Bitcoin Cash (BCH). This strategic move underscores Grayscale’s intent to broaden its portfolio of crypto investment products and to shift existing trusts into ETF structures, pending regulatory approval.
In particular, the company has filed Form S-3 registration statements with the SEC for the conversion of its Litecoin and Bitcoin Cash Trusts into ETFs. If the SEC approves these proposals, the ETFs could be offered on NYSE Arca. Grayscale has indicated that they are utilizing the proposed Generic Listing Standards in these filings. Although these standards have yet to receive SEC approval, their adoption could allow the funds to list without necessitating further rule changes.
Notably, the filing for the Bitcoin Cash ETF marks it as the first of its kind to be officially submitted to the SEC. Should the proposal move forward, it plans to utilize Bank of New York Mellon as its administrator, with Coinbase serving as the prime broker and custodian. This follow-up comes on the heels of Grayscale’s endeavor to convert its Chainlink Trust into an ETF, similarly relying on the S-3 form while awaiting confirmation of the Generic Listing Standards.
For the Litecoin ETF, Grayscale has not initiated an active 19b-4 application, indicating a preference to rely on the potential implementation of the listing standards instead of pursuing separate rule changes for each fund. The company noted in its filing, “We believe the fund meets the requirements for listing under the proposed Generic Listing Standards, subject to SEC approval.”
Meanwhile, the filing for the Hedera ETF follows a different route. Grayscale has submitted a Form S-1, indicating the creation of an entirely new investment offering rather than the conversion of an existing trust. Concurrently, Nasdaq has filed a 19b-4 application to include the Hedera ETF in its offerings, which is currently undergoing SEC review. The SEC has deferred its decision on this rule change, with a couple of key deadlines approaching: the next one is October 13, with a potential extension leading to a final deadline of November 12. Given that Grayscale does not currently operate a Hedera trust, this ETF would represent a new venture for the firm.
In parallel, another fund issuer, Canary, has filed for its own Hedera ETF, with its final decision deadline slated for November 8. This timing opens the possibility that the SEC might approve both Hedera ETF applications concurrently, depending on the outcomes of their reviews.
Grayscale’s approach aligns closely with its recent filing strategy concerning the Chainlink ETF, whereby the firm is systematically converting existing trusts into ETFs through the S-3 form. This technique relies on the SEC endorsing broader listing regulations for cryptocurrency-related funds, potentially streamlining the regulatory process for multiple fund applications under the proposed Generic Listing Standards.
This wave of ETF filings follows the SEC’s earlier endorsement of several spot Bitcoin ETFs in 2024, suggesting that Grayscale is actively positioning itself for increased acceptance of crypto ETFs beyond Bitcoin, as it navigates through the evolving regulatory landscape and market dynamics. Although no definitive timeline has been established for when the SEC might render decisions on these proposed Generic Listing Standards, Grayscale appears willing to wait rather than pursue intricate rule changes on a case-by-case basis.
