Author: Jason Shubnell
Compiled by Deep潮 TechFlow
Deep潮 Overview: Krista Lynch, Head of Trading and Capital Markets at Grayscale, revealed at Token2049 Singapore that the Grayscale Zcash ETF (ZCSH) attracted over $1 billion in assets during its first 30 trading days, placing it among the top 1% of newly launched ETFs by first-month scale over the past decade. The SEC’s general listing standards now cover approximately 15 tokens, and issuers are beginning to “select coins.” In our view, this means competition in altcoin ETFs has shifted from “whether they can list” to “who can attract capital,” with funds concentrating on a select few assets with compelling narratives and demand. Furthermore, after the Clarity Act failed to pass, Grayscale has pivoted to pursuing fund tokenization through the SEC’s innovation exemption, indicating that compliance pathways are continuing to advance despite legislative gridlock.
Krista Lynch also stated that Grayscale’s two covered call fund tokenization applications, submitted under the SEC’s innovation exemption, point the way forward for the industry following the failure of the Clear Act.
Key Highlights
At Token2049, Grayscale’s Head of Trading told The Starting Block that the SEC’s general listing standards currently cover approximately 15 tokens, giving issuers more flexibility in product selection.
According to the head of trading and capital markets at Grayscale, the crypto ETF market is entering a new phase as issuers look beyond Bitcoin and Ethereum and become more selective about which digital assets are sufficient to support investment products.
GrayScale Managing Director Krista Lynch said the U.S. Securities and Exchange Commission’s (SEC) general listing standards have established a framework covering approximately 15 tokens, allowing issuers to more autonomously decide which products to launch based on investor demand and their own judgment. In January, GrayScale indicated that 27 assets were under consideration, spanning categories such as AI, DeFi, consumer, and infrastructure.
This selectivity is already evident in the market. Lynch noted that Grayscale’s Zcash ETF (ticker: ZCSH) attracted over $1 billion in assets within its first 30 trading days after launch, placing it among the top 1% of ETFs launched over the past decade by assets raised in its first month.
“Measured by assets raised in its first month as an ETF, the Zcash ETF ranks in the top 1% of all ETFs launched over the past decade,” Lynch said in an interview with The Starting Block at Token2049 Singapore.
Chart: Spot ETF trading volume for various cryptocurrencies (excluding BTC and ETH). Source: The Block/Yahoo Finance.
The trading desk Lynch oversees is responsible for buying or selling the underlying tokens for every subscription and redemption in Grayscale’s entire ETF product line, and she says the role has now expanded into business development and investor education.
“At Token2049, everyone is deeply immersed in the crypto bubble, but many of our conversations are actually about ‘What is Bitcoin? What is Ethereum?’” she said. “You have to start with the basics.”
Lynch said that as the ETF market expands, Grayscale is also looking beyond traditional fund structures. Following the SEC’s introduction of an innovative exemption, the company last week filed an application to tokenize two of its products established under the Investment Company Act of 1940: a Bitcoin covered call fund and an Ethereum covered call fund. Lynch described this exemption as a “consolation prize” following the failure of the Clarity Act.
“Of course, the Clear Act did not pass, and we are frustrated and disappointed, but once we moved past the fact that ‘it didn’t pass,’ it somehow became clearer—it’s no longer an unresolved question,” Lynch said.
Lynch said that, nonetheless, the SEC's exemption provides a pathway for the industry to advance tokenization. Last month, Grayscale, along with several crypto companies, urged the SEC to accelerate its ETF review process and allow confidential submission of registration drafts.