Crypto ETFs will expand to new asset types, indexes — Grayscale executive

The market for cryptocurrency exchange-traded funds (ETFs) will expand to encompass new types of digital assets as well as diversified crypto indexes, according to an executive at asset manager Grayscale Investments. 

“We're going to see a number of more single asset products, and then also certainly some index based and diversified products,” Dave Lavalle, Grayscale’s global head of ETFs, said during an Aug. 12 webinar.

Grayscale is among the largest issuers of crypto ETFs, with upward of $25 billion in assets under management (AUM) across its United States-listed crypto ETFs. Its US exchange-traded products currently comprise single-asset Bitcoin (BTC) and Ether (ETH) funds.

The SEC authorized BTC ETFs to start trading in January and then did the same for ETH ETFs in July. No other types of cryptocurrency ETFs are currently allowed to trade in the United States.

Lavalle said he has been surprised by “how swiftly we have advanced the conversation around digital assets being a critical component in clients' portfolios” and added that he had not expected the SEC to greenlight ETH ETFs as quickly as it did.

“The path with which we came to regulatory permission to launch Ethereum spot ETPs was quite a sprint and a little bit of a shock when I think the entirety of the market thought that we were going to be faced with denials from the SEC,” Lavalle said.

Numerous other proposed crypto ETFs are awaiting regulatory approval. They include new types of single-asset funds, such as Solana (SOL) ETFs, and diversified crypto indexes, such as the Hashdex Nasdaq Crypto Index ETF.

National securities exchanges, such as Nasdaq, are also hoping to begin listing options on BTC and ETH ETFs soon.

Crypto ETFs have seen enormous demand since launching this year, aided in part by adoption by large financial institutions such as Morgan Stanley.

“We have more than 15 billion inflows. That’s more than three times the largest one-year inflow of any ETF ever in the history of ETFs,” Lavalle said. “So we’re, we're talking about massive, massive adoption.”