World’s largest digital asset manager Grayscale is seeking 3 new crypto ETFs

Updated: 10 May 2023

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Grayscale Investments, the largest digital asset management firm, is looking to launch three new crypto exchange-traded funds. The firm’s plan for the launch comes as it awaits a court ruling on converting the Grayscale Bitcoin Trust (GBTC) into an ETF.

Grayscale readies to launch 3 new crypto ETFs

Grayscale has made a filing to launch these products despite regulatory uncertainty around crypto ETFs. The US Securities and Exchange Commission (SEC) has failed to approve any application for a spot Bitcoin ETF. The SEC has instead approved several Bitcoin futures ETFs.

However, Grayscale is adamant about bringing a spot crypto ETF to the market. The asset manager wants to launch a Global Bitcoin Composite ETF that will invest in exchange-traded products that have exposure to Bitcoin or are backed by Bitcoin.

The ETF will also invest in Bitcoin mining companies. Eric Balchunas, an analyst with Bloomberg Intelligence, has said that the fund proposed by Grayscale is a “semi-spot Bitcoin ETF.”

Grayscale just filed for a semi-spot bitcoin ETF, as well as Ethereum Futures ETF and a Privacy ETF. Interesting.. pic.twitter.com/MPruDolp7G

— Eric Balchunas (@EricBalchunas) May 9, 2023

Grayscale is also exploring the possible launch of a fund with an “actively-managed exposure to Ethereum futures contract.” The Ethereum futures ETF will allow investors to have indirect exposure to the future value of ETH by tracking the price of the second-largest cryptocurrency. While the SEC approved several Bitcoin futures ETFs in October 2021, no Ether future funds are available in the US.

The third fund that Grayscale plans to launch is the Grayscale Privacy ETF. This ETF will invest in companies looking to launch privacy solutions that are based on blockchain. The fund will also invest in digital assets designed to boost privacy and secure transactions by hiding the identities of users and transaction details.

Grayscale is launching these funds after unveiling a new business division known as the Grayscale Funds Trust. The trust must be approved by the SEC before the three ETFs can become available to investors.

NEW TODAY: We’re proud to announce the formation of Grayscale Funds Trust, a Delaware statutory trust structure that enhances our capabilities as a global asset manager.
Investors want and deserve access to future-forward investment opportunities, and Grayscale Funds Trust will… pic.twitter.com/qEeqwWHNSe

— Grayscale (@Grayscale) May 9, 2023

“We are proud to have launched our first products in the US and Europe in 2022, and today’s filing demonstrates our continued commitment to offering investors innovative ways to access the digital economy and transformative technologies using a familiar, trusted, regulated investment vehicle: the ETF,” said the Grayscale Global Head of ETFs, David LaValle.

Tussle between Grayscale and the SEC

The announcement by Grayscale comes as the digital asset manager is entangled in a conflict with the SEC about converting the $17 billion GBTC to a spot Bitcoin ETF. Grayscale sued the SEC on January 13 for denying its ETF application. The digital asset manager argued that the SEC was biased in treating crypto spot ETFs differently from futures ETFs.

However, the lawsuit has not seen the SEC changing its views on spot crypto ETFs. The regulator believes that Bitcoin futures ETFs are less risky than spot Bitcoin ETFs because the latter exposes investors to fraud and market manipulation. Grayscale’s lawsuit is aimed at compelling the regulator to greenlight its spot Bitcoin ETF.

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