On 14th October 2019, Grayscale Investments, the largest digital currency assets manager, announced that Grayscale Digital Large Cap Fund (DLC) shares, received approval from FINRA for a public quotation.
The said shares will be under the symbol, GDLCF, on the OTC markets. Grayscale will be the first publicly quoted security drawing value from various digital currencies in the U.S.
DCL’s Private Placement
The Digital Large Fund Cap (DLC) is an open-ended fund managed by Grayscale. The fund grants investors exposure about the price movement of various large-cap digital currencies without the need for buying, storing, and safekeeping digital currencies.
Since February 2018, DCL has offered private placements to certified investors. There were 3,194,900 of DCL outstanding shares as of 30th September. Shares created through private investment will become eligible for sale in the public market after a one-year holding period, as stated under rule 144 of the securities act. There will, thus, be no trading volume in the shares free quotation until the shares are eligible, which is expected soon.
Once the shares are eligible, investors can buy and sell DCL shares freely in the same way they trade with unregistered securities.
Grayscale Fund Construction Criteria
With DLC, we have a variety of selected digital currencies that meet Grayscale’s fund construction criteria of fund components. Funds components comprised of 80.3% Bitcoin (BTC), 9.9% Ethereum (ETH), 5.8% XRP, 2.2% Bitcoin Cash (BCH), and 1.8% Litecoin (LTC). This information was as of 30th September 2019.
DLC’s objective is to have the shares reflect the value of the fund components. The Digital Assets Reference Rate determines this for each fund component calculated at 4.00 pm New York time. The Digital Assets Reference rate calculated on 30th September 2019 showed that each share represented 0.00049043 Bitcoin (BTC), 0.00283525 Ethereum (ETH), 1.13609958 XRP, 0.00049348 Bitcoin Cash (BCH), and 0.00160253 Litecoin (LTC). The amount of Fund component represented by each share will gradually decrease with time, given that DCL does not generate more funds. Instead, they distribute the fund components to pay for their expenses.
DLC targets to cover the upper 70% of the digital market, with the composition being evaluated quarterly. This evaluation allows DCL to either remove or add a new fund component in line with their fund construction criteria. DCL is also allowed to hold cash or assets that would result from instances such as an airdrop, fork, or any other such event. DLC is not registered under SEC and thus cannot be subjected to disclosure or other such security laws.
Grayscale products are available to both institutional and individual certified investors. DLC is one of the Grayscale products. It is the fourth publicly quoted investment product. Other Grayscale publicly quoted products include Grayscale® Bitcoin Trust, Grayscale® Ethereum Trust, and Grayscale® Ethereum Classic Trust. All these products are available to all investors with access to the U.S securities. With Grayscale investments, investors are given viable tools to allow them to make informed decisions.