Grayscale, a prominent player in the digital asset management space, has taken significant steps to expand its offerings by filing multiple documents with the U.S. Securities and Exchange Commission (SEC) aimed at securing approval for exchange-traded funds (ETFs) based on Bitcoin Cash, Litecoin, and Hedera. These submissions include S-1 and S-3 filings, which are essential paperwork for the proposed ETFs. The firm’s strategy intends to transition its existing closed-end trusts for these cryptocurrencies into ETFs that would generally be traded on well-known platforms such as NYSE Arca or Nasdaq.
This recent move marks another chapter in Grayscale’s ongoing efforts to reformulate its product lineup. Notably, in 2024, the company successfully converted its Bitcoin (BTC) and Ethereum (ETH) trusts into exchange-traded products, setting a precedent for these further developments.
In the specific context of the Litecoin ETF, the S-3 filing suggests that the SEC must either approve an associated 19b-4 application or establish new general listing regulations that would allow the Trust’s shares to be listed on NYSE Arca. The shift towards altcoin ETFs appears to reflect a broader trend, with various cryptocurrency companies also pursuing SEC approval for similar initiatives, targeting assets like Dogecoin and XRP.
Earlier this week, reports surfaced indicating that the SEC deferred its decision regarding Bitwise’s proposed spot Dogecoin ETF and Grayscale’s spot Hedera ETF. This delay comes amidst a climate of rising interest in cryptocurrency ETFs, making stakeholders keenly aware of regulatory timelines and prospects.
Grayscale’s Bitcoin Cash trust has shown notable performance, boasting a net asset value surpassing $202 million and share prices valued at $4.31 as of June 30. This performance underscores the potential benefits of transitioning to an ETF structure, which contrasts significantly with the workings of a closed-end trust. While closed-end trusts can trade above or below their net asset value, ETFs typically trade assets based on market demand, providing a mechanism that maintains share prices close to their net asset values through an open-end structure that accommodates the creation and redemption of shares.
In a related development, Grayscale previously engaged in legal action against the SEC after the commission rejected its proposal to convert its trust into an ETF. Analysts suggest that this litigation could have influenced the SEC’s subsequent approvals for BTC and ETH ETFs.
Since the introduction of spot Bitcoin ETFs in the U.S. in January 2024, these products have reportedly achieved an impressive trading volume, exceeding $1.2 trillion, indicating a growing appetite for cryptocurrency in traditional financial spaces.
Amid the backdrop of these developments, the SEC has once again postponed its decision regarding Bitwise’s Dogecoin ETF. Although REX Shares and Osprey Funds are set to launch their own Dogecoin ETF, the SEC’s recent delay raises questions about the future regulatory environment for such funds. The commission justified the postponement as a necessary step to adequately review a proposed rule change that could enable the listing of a blockchain-based fund tracking Dogecoin.
While Bitwise’s DOGE fund has faced numerous delays, REX Shares and Osprey Funds are prepared to initiate their ETF trading activities, signaling a possible horizon for meme coin ETFs. Analyst Eric Balchunas remarked on the situation, calling the Thursday launch a pivotal moment, marking the advent of meme coin ETFs in the U.S., despite challenges regarding practical utility and regulatory clarity.
