Grayscale Investments, the world’s largest digital asset manager and creator of the Grayscale Bitcoin Trust (GBTC), announced Monday that its Digital Large Cap Fund (GDLC) is now an SEC-reporting company.
According to a report by Decrypt, the company will soon be seeking SEC approval for its Litecoin, Ethereum Classic, and Bitcoin Cash funds to become SEC-reporting entities as well.
GDLC is Grayscale’s third SEC-reporting company; both the Grayscale Bitcoin Trust and Grayscale Ethereum Trust became SEC-reporting companies last year.
The Digital Large Cap Fund holds multiple assets, including Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Chainlink, and Cardano. The fund currently has over $348 million assets under management, and imposes a minimum investment requirement of $50,000.
The fund has a management fee of 2.5% annually.
The Implications of Becoming an SEC-Reporting Entity
Becoming an SEC-reporting company has many perks. Most importantly, it allows wealthy investors to liquidate their shares of the fund on the retail market much sooner: shares can now be liquidated in six months rather than twelve.
Additionally, Grayscale believes the designation may provide assurance to crypto-hesitant investors.
The fund must now file quarterly and annual reports, also called 10-Qs and 10-Ks, respectively. It must also file Form 8-K for significant events.
Grayscale VP of legal Craig Salm told Decrypt that the Bitcoin and Ethereum trusts have been trading below the underlying price of the cryptos, creating a discount. That has led some institutional investors to buy shares “because they know there will be an ETF and [the Grayscale shares]are a way to get bitcoin cheap.”
These institutions, he says, buy these shares in hopes of “cashing in on a new form of arbitrage” – arbitrage that will only occur if the SEC approves a Bitcoin or Ethereum ETF.
According to Salm, seeking SEC-reporting status for its trusts will put Grayscale “in a good position for the future crypto ETF era, since Grayscale will have to file forms like 10-K and 10-Qs under that regime anyways.”
Grayscale has previously stated that it is ready to convert shares from its trusts into ETF shares as soon as the SEC begins approving crypto ETFs.
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