Grayscale Investments Seeks SEC Approval for Privacy-Focused ETF
Asset management firm Grayscale Investments has filed a new application with the United States Securities and Exchange Commission (SEC) in an effort to expand its offering to include privacy-centered exchange-traded funds (ETFs). If approved, this would make Grayscale the first asset manager to capture the emerging privacy technology and cybersecurity sector.
Tracking Key Sub-Themes of Data Privacy Sector
- The potential privacy-centered ETF will be an index-based fund designed to track the performance of companies across five key sub-themes of the data privacy sector.
- The sub-themes include data service solutions, cyber service providers, blockchain-based privacy solutions, network and communication security providers, and privacy-preserving protocols.
- To be eligible for inclusion, companies must derive about 50% of their revenues from these sub-themes.
Eligibility Criteria for Inclusion
- Eligible firms must publicly trade in the United States, non-US developed markets, or emerging markets’ stock exchanges.
- They must have a market capitalization of up to $250 million and meet certain liquidity criteria.
ZCash Integration Planned
To bring the privacy-centered ETF to reality, Grayscale plans to allocate 10% of funds to Grayscale ZCash Trust (ZCSH), a fund that invests in ZCash (ZEC).
Fighting Outflows and Diversifying Capital
- The pursuit of this privacy-centered ETF may be one of Grayscale’s strategies to fight and rebalance the massive outflows from its spot Bitcoin ETF GBTC.
- Diversifying capital through the introduction of new ETFs could help reduce the pressure on GBTC.
Other Initiatives by Grayscale
Grayscale has also initiated private placements for select cryptocurrency trusts, including Bitcoin Cash, Chainlink, Litecoin, Solana, and Stellar Lumens trusts.
Hot Take: Grayscale Expands into Privacy-Centered ETFs
Grayscale Investments is seeking SEC approval to launch privacy-centered ETFs, aiming to capture the growing privacy technology and cybersecurity sector. By diversifying its offerings beyond the Bitcoin Trust (GBTC), Grayscale is adapting to market demand and potentially reducing the impact of outflows from its spot Bitcoin ETF. If approved, the privacy-focused ETF would track companies across key sub-themes of the data privacy sector, promoting the importance of privacy and security in today’s world. Additionally, Grayscale plans to integrate ZCash into the ETF, further emphasizing its commitment to privacy-centric investments.
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