On Thursday, Grayscale Investments, the world’s largest digital currency asset manager, announced its filing of Form 10 with the SEC for the Grayscale Digital Large Cap Fund (GDLC), the company announced in a press release.
If the Form 10 becomes effective, the fund would become Grayscale’s third digital currency investment vehicle to become an SEC-reporting company, following the Grayscale Bitcoin Trust and the Grayscale Ethereum Trust.
The Grayscale Digital Large Cap Fund holds digital currencies that “collectively constitute at least 70% of the market capitalization of the entire digital asset market” per the Information Statement on the Fund. It is evaluated quarterly to ensure that the weights in its portfolio reflect the current crypto markets.
Becoming an SEC-reporting company offers investors several protections.
For starters, it would mean that Grayscale would be required to report quarterly 10-Qs and annual 10-Ks to the SEC, just like stocks and ETFs.
10-Qs and 10-Ks are both detailed financial statements that allow investors to have a more complete view of a company’s financials, structuring, and performance.
Additionally, it would be required to comply with all obligations of the Securities Exchange Act of 1934, including that law’s protections against fraud, something that the SEC has gone on record recently as being a concern in the cryptocurrency markets.
Finally, if the Form 10 becomes effective, it would reduce the statutory holding period for private placement of shares from one year to six months, giving investors the ability to trade their shares sooner after purchase, and bringing increased liquidity to investors in the fund.
Grayscale does not offer any cryptocurrency ETFs, but the firm is openly working toward that goal. For example, the firm has said that it is 100% committed to converting GBTC to an ETF as soon as it is able.
See also: SEC Heads Dampen Hopes for a Bitcoin ETF in 2021
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