Grayscale Wins First US Approval For Cryptocurrency-Based Security

Bitcoinist October 15, 2019
Updated 2019/10/15 at 3:29 PM
3 Min Read

A pivotal US self-regulatory organization has formally licensed the country’s first public security based on cryptocurrency markets.

Large Cap Fund Gets FINRA Say-So

Shares of Grayscale’s Digital Large Cap Fund (DLC) received the green light from the Financial Industry Regulatory Authority (FINRA) this week, a press release confirmed on October 14.

Grayscale, currently the world’s largest cryptocurrency asset manager, has operated the DLC since the beginning of 2018.

The investment vehicle allows institutional clients to gain access to the price of several cryptocurrency assets without taking on the risk and compliance obligations of trading them direct.

The approval sets off a one-year cooling off period during which, under US securities law, the DLC shares will not be publicly tradable.

“There will be no trading volume in the Shares’ public quotation until the Shares are DTC eligible, which GDLC is expected to receive soon,” the press release added.

Investors will be able to buy and sell freely-tradable DLC shares through their investment accounts in the same manner as they would other unregistered securities.

The DLC currently consists of 80% Bitcoin 00, followed by 9.9% Ethereum 00. The other minority components are Bitcoin Cash, Litecoin and XRP.

Grayscale Stays Upbeat On Precarious Crypto Market

The announcement continues a return to form for Grayscale’s fortunes in the latter half of 2019. Previously, the company revealed institutional interest had remained constant throughout Q2 this year.

Following on from its buoyant Digital Asset Investment Report released in July, executives revealed institutions were still curious about crypto despite the end of the bullish market phase which began in April.

“…There’s this rhetoric in the media about when are institutional investors going to get involved, when are they going to start investing, and it’s so funny because it’s ironic,” director of sales and business development Rayhaneh Sharif-Askary told news outlet The Block last week.

“We see institutional investors invest with us all the time and that’s been the case for a long time now.”

As Bitcoinist reported, sentiment had largely tended to the contrary in recent weeks as Bitcoin floundered. According to industry research, coverage of institutional interest in the sector reached its lowest point in September.

A positive decision about another pioneering investment tool – the first Bitcoin exchange-traded fund (ETF) – could have boosted sentiment. This did not happen, however, with US regulators denying its entry to market.

What do you think about FINRA’s decision? Let us know in the comments below!

Images via Shutterstock

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