Asset manager Grayscale received approval from the US Securities and Exchange Commission (SEC) on Tuesday to convert its Digital Large-Cap Fund into an exchange-traded fund (ETF).

The fund consists of the five biggest cryptocurrencies by market capitalization featured in the CoinDesk Five Index.

Roughly 80.2% of the weighted fund is Bitcoin (BTC), followed by Ether (ETH) at 11.3%, while Solana (SOL) accounts for approximately 2.7% of the fund, XRP (XRP) commands over 4.8%, and Cardano's ADA (ADA) has a weighting of 0.81% in the fund.

Investors have long capitalized on arbitrage opportunities for Grayscale's crypto trusts, exploiting premiums or discounts to net asset value (NAV), the funds' total assets minus liabilities, to lock in profit.

SEC, Grayscale, ETF
The US SEC approves the conversion of Grayscale’s Large-Cap Crypto Fund into an ETF. Source: SEC

These spread windows were mostly due to the lock-up period of Grayscale's crypto trusts and the lack of in-kind redemptions. However, arbitrage opportunities have diminished ever since Grayscale began converting its private digital asset trusts into ETFs. Its Tuesday's letter read:

"The investment objective of the Fund is for the value of the shares to reflect the value of the digital assets held by the Fund, 'Fund Components' as determined by reference to their respective Index Prices and weightings within the Fund, less the Fund’s expenses and other liabilities."

Grayscale was a pioneer of crypto investment vehicles and provided investors with exposure to digital assets without the technical challenges of holding crypto directly. The conversion of its crypto trusts into exchange-traded funds signals the end of an era and the maturation of the industry.

Related: Analysts raise chance of SOL, XRP and LTC ETF approval to 95%

Grayscale took the conversion battle to the courts and won

In June 2022, Grayscale petitioned the court for the right to convert its Bitcoin trust into an ETF after the SEC denied its application.

SEC, Grayscale, ETF
Inflows for Bitcoin ETFs, including Grayscale’s Bitcoin Trust, since June 12, 2025. Source: Farside Investors

The legal battle lasted roughly one year, and in August 2023 a US judge ruled that the SEC was “arbitrary and capricious” in its denial of the conversion request and granted Grayscale's petition.

Grayscale's Bitcoin trust now trades as an ETF and commands an expense ratio of 1.5%, making it the most expensive Bitcoin ETF on the market and the highest-grossing BTC investment vehicle.

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