NYSE Arca has submitted a request to U.S. regulators for permission to list a new Grayscale exchange-traded fund (ETF) that features a diverse portfolio of spot cryptocurrencies, as per a filing on October 29. The ETF aims to convert the existing Grayscale Digital Large Cap Fund, which has been operational since 2018, into an exchange-traded product.

The Grayscale Digital Large Cap Fund currently manages around $565 million in assets. It holds a mix of major cryptocurrencies, including Bitcoin, Ether, Solana, Avalanche, and XRP, making it unique among similar ETF proposals. The fund tracks the CoinDesk Large Cap Select Index, covering a total of five different crypto assets. Grayscale’s push to transition the fund into an ETF came on October 16, shortly before NYSE's request.

Grayscale faces competition from other major asset managers like Hashdex and Franklin Templeton, who have also proposed index funds. However, unlike Grayscale’s diversified approach, these competitors focus primarily on Bitcoin and Ether.

Industry experts view crypto index ETFs as the next logical step following the success of Bitcoin and Ether ETFs earlier this year. Katalin Tischhauser, head of investment research at crypto bank Sygnum, emphasized that index ETFs provide an efficient way for investors to gain diversified exposure to the crypto market.

The surge in ETF filings is being seen as a strategic move by asset managers ahead of the 2024 U.S. presidential election. Analysts suggest that the election outcome could significantly impact regulatory decisions on crypto products. If former President Trump were to win, a more crypto-friendly stance could emerge, while a Kamala Harris victory might lead to a more cautious approach.

The regulatory landscape remains in flux, with other players like Cboe and Bitwise also seeking approval for new ETFs focused on altcoins like Solana, XRP, and Litecoin. As the market eagerly awaits the regulators' decision, the future of diversified crypto ETFs hangs in the balance.