On 27 June 2025, the United States Securities and Exchange Commission (US SEC) issued Release No. 34-103345 (File No. SR-NYSEARCA-2024-87), inviting public comment on Amendment No. 1 to NYSE Arca’s proposed rule change to list and trade shares of the Grayscale Digital Large Cap Fund LLC, a diversified crypto trust tracking the CoinDesk 5 Index. The revised proposal seeks approval under the Exchange’s existing Rule 8.500-E.
The revised filing withdraws NYSE Arca’s prior effort to introduce a new listing category for digital asset-based investment interests (Rule 8.800-E) and instead integrates the proposal within established Trust Unit rules under Rule 8.500-E. The amendment aims to transform the Grayscale Digital Large Cap Fund (GDLC), currently quoted on OTCQX, into a publicly listed spot crypto ETF, allowing in-kind creation and redemption mechanisms. The US SEC continues its evaluation under Section 6(b)(5) and Section 19(b)(2)(B) of the United States Securities Exchange Act of 1934, focusing on anti-fraud mechanisms, investor protection, and whether the underlying market structure satisfies the US SEC’s long-standing concerns around surveillance and market manipulation.
The amendment defines “Trust Units” under NYSE Arca Rule 8.500-E(b)(2) as “securities issued by a trust, limited liability company, or other similar entity” holding investments in futures, options, swaps, commodities, or securities, with the proposed amendment clarifying that commodity pool status applies only “if applicable.” This broadens issuer flexibility, potentially increasing ETP offerings. The “Index Price” is defined as “the U.S. dollar value of each Fund Component derived from the Digital Asset Trading Platforms…calculated at 4:00 p.m. New York time,” designed to mitigate fraud through volume-weighted, real-time adjustments.
The US SEC’s focus on the CD5’s pricing methodology is to eliminate manipulation risks in less-regulated digital asset markets. The requirement for 85% Approved Components aligns with prior approvals for Bitcoin ETFs, where CME futures provided a regulated reference market. The absence of similar futures for all Fund Components complicates approval, as the US SEC seeks assurance that non-ISG platforms do not undermine pricing integrity. The proposed surveillance, leveraging FINRA and ISG, aims to address this, but public comments will likely shape whether these measures suffice under Section 6(b)(5).
Timeline
On 15 October 2024, NYSE Arca filed the initial proposal to adopt new Rule 8.800-E and list GDLC shares.
On 4 November 2024, proposal was published in the Federal Register (89 FR 87681).
On 17 December 2024, US SEC extended review period under Section 19(b)(2).
On 31 January 2025, US SEC instituted Proceedings under Section 19(b)(2)(B) to determine approval/disapproval.
On 29 April 2025, US SEC gave further extension for decision deadline to 2 July 2025.
On 26 June 2025, NYSE Arca filed Amendment No. 1, replacing the original rule proposal entirely.
On 27 June 2025, US SEC published the amended proposal for public comment.
ETF Structure and Digital Asset Exposure
The Grayscale Digital Large Cap Fund, a Cayman Islands limited liability company formed on 25 January 2018, operates as a passive investment vehicle managed by Grayscale Investments Sponsors, LLC, a subsidiary of Digital Currency Group, Inc. The Fund’s assets consist of digital assets comprising the CD5, including Bitcoin and other major cryptocurrencies, with weightings generally mirroring the index unless adjusted by the manager under rules-based circumstances. The Fund’s shares, expected to trade under the ticker “GDLC,” are registered under Section 12(g) of the United States Securities Exchange Act of 1934 and have been quoted on OTCQX since 14 October 2019. The Fund is not registered under the United States Investment Company Act of 1940, relying on exemptions for commodity pools or similar entities.
The net asset value (NAV) is calculated daily at 4:00 p.m. New York time, using Index Prices from the CD5, adjusted for expenses like the Manager’s Fee (currently 2.5% annually, to be lowered upon ETP listing) and Additional Fund Expenses. Creation and redemption of shares occur via “Baskets” through Authorized Participants, facilitated by Liquidity Providers transferring digital assets or cash. Coinbase Custody Trust Company, LLC serves as custodian, with BNY Mellon Asset Servicing as administrator and transfer agent, and Foreside Fund Services, LLC as marketing agent. The Fund does not engage in active management or derivatives, and it prospectively abandons Forked Assets acquired through blockchain forks.
The Grayscale Digital Large Cap Fund LLC, formed in the Cayman Islands and managed by Grayscale Investments, seeks to track the CoinDesk 5 Index (CD5), which represents ~86% of the total market cap (excluding stablecoins) as of March 2025. The Fund’s assets are limited to the following spot cryptoassets (approximate weights as of filing date):
- Bitcoin (BTC) – 80.20%
- Ether (ETH) – 11.39%
- XRP – 4.82%
- Solana (SOL) – 2.78%
- Cardano (ADA) – 0.81%
The fund will not use derivatives, staking, leverage, or lending. Coinbase Custody Trust Company acts as the custodian with BNY Mellon as transfer agent. Index pricing is based on a volume-weighted composite from a basket of global trading platforms, including both US and non-US licensed venues.
Interested parties may submit comments on the proposed rule change, as modified by Amendment No. 1, until 21 days after publication in the Federal Register, expected by mid-July 2025. Submissions should reference File No. SR-NYSEARCA-2024-87 and can be made electronically via the US SEC’s comment form or by email to rule-comments@sec.gov, with the file number in the subject line. Paper comments should be sent in triplicate to the Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. All comments will be posted on the US SEC’s website and available for public viewing at the US SEC’s Public Reference Room.
(Source: https://www.sec.gov/files/rules/sro/nysearca/2025/34-103345.pdf)
