Cryptocurrency derivatives broker Grayscale has secured regulatory approval from the US Financial Industry Regulatory Authority (FINRA) – one of the three major financial regulators – to launch a fund tracking the price of the large-cap cryptocurrencies accounting for at least 70% of the digital asset market.
As of September 30th – when the fund was initially constituted, Bitcoin made a majority of that percentage with Ethereum following up with the second-largest representation.
XRP, Litecoin and Bitcoin Cash also make the cut at least for the launch product. Dubbed the Grayscale Digital Large Cap (GDLC) fund, the new product will be traded on over the counter markets under the symbol GDLCF.
To account for the volatile nature of the digital assets space, the fund constitution will be recalculated very quarter to account for the market dominance of the assets at the different quarterly reconstitutions.
As of September 30th, 2019 Bitcoin will account for 80% while Ethereum takes up about 10%. The remaining 10% is disrupted amongst XRP, Bitcoin Cash and Litecoin taking up 5.8%, 2.2%, and 1.8% respectively.
The fund will not be actively managed and therefore will be a passive investment product for the company that has been offering digital asset derivative products since the start of 2018.
Grayscale claims that GDLC is the first product of its kind to be available to US investors. Michael Sonnenshein, Grayscale’s managing director told industry press that:
“The bitcoin trust is one of the most liquid securities on OTCQX market daily [and that] to our knowledge, this is the first diversified digital currency offering going on the U.S. public market.”
The GDLC adds to Grayscale’s three funds already being offered to investors that track individual digital assets.
The Bitcoin Trust (OTCQX: GBTC), Ethereum Trust (OTCQX: ETHE), and Ethereum Classic Trust (OTCQX: ETCG) have been on offer to accredited investors since its launch in early 2018.
With the Large Cap Fund – which operates similar to an ETF – investors will be able to gain exposure to the digital assets underlying the basket without having to suffer through the individual price volatility of each asset.
However, with cryptocurrency, it is safe to say that price movement almost always track the movement of the price of Bitcoin and with the large portion of the fund being represented by Bitcoin, it will be expected that the value of the fund will largely be influenced by the price of Bitcoin.