Grayscale Investments has been given the go-ahead from the U.S. Financial Industry Regulatory Authority (FINRA) to launch an exchange-listed security backed by a basket of digital assets.
The investment fund company said it expected the Grayscale Digital Large Cap Fund (DLC) to trade on the New York-based OTCQX market – part of the OTC Group which specialises in listing over-the-counter products – and will trade under the symbol GDLCF.
Trading will not commence, however, until the fund receives DTC eligibility: DTC is the world’s largest securities depository and the eligibility process requires that the securities must be issued “in transaction registered with the Securities Exchange Commission (SEC)”.
SEC Exempt
Thus, despite the Digital Large Cap Fund having FINRA approval, to gain access to the depository system it must either register with the SEC or show that its product is exempt from SEC registration. The press release accompanying the announcement of the fund stated:
DLC is not registered with the Securities and Exchange Commission and is not subject to disclosure and certain other requirements mandated by US securities laws.
The fund has offered a private placement to accredited investors since February 2018 and at the end of September this year there were 3,194,900 DLC shares outstanding. These shares created through the private placement became eligble to sell into the secondary public market after a one-year holding period.
DLC fund construction is as follows:
- 80.3% bitcoin
- 9.9% ether
- 5.8% XRP
- 2.2% bitcoin cash
- 1.8% litecoin
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