Grayscale Introduces New Crypto Indices with FTSE Russell

TL;DR

• Grayscale Investments is teaming up with FTSE Russell to introduce the Crypto Sector Index Series, categorizing and monitoring digital assets based on their specific functions.
• DCG, the parent company of Grayscale, recently encountered legal action from the New York Attorney General (NYAG) for purportedly concealing financial discrepancies.

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Grayscale Launches Crypto Indices Product with FTSE Russell

In an intriguing new development, Grayscale Investments, notable for its involvement in crypto asset management, is delving into cryptocurrency indices. 

This move comes as part of a collaboration with FTSE Russell, an indices provider operating under the London Stock Exchange.

This partnership aims to unveil a unique offering for investors interested in cryptocurrency: the Crypto Sector Index Series. 

This innovative product, announced on Tuesday morning, is set to feature a range of indices. 

These indices will monitor price movements across different categories of digital assets, segmented by their specific applications.

The digital asset universe is ever-expanding. Grayscale Crypto Sectors is a new framework designed to set the standard for organizing the crypto asset class.
(1/11) pic.twitter.com/SQDieaVBeA

— Grayscale (@Grayscale) October 24, 2023

The classifications cover a wide spectrum: from cryptocurrencies recognized for their transactional purposes or storing value and projects based on smart contracts to tokens associated with financial services. 

Additionally, the indices will encompass coins linked to creative, gaming, and media assets and those dedicated to practical, real-world applications.

The indices would employ the square root of the market capitalization of each cryptocurrency within its respective category. 

This approach ensures that highly capitalized cryptocurrencies like Bitcoin do not disproportionately influence the entire category. 

Consequently, investors can anticipate a broader and more balanced exposure to the crypto market.

Legal Challenge for DCG

New York’s Attorney General, Letitia James, initiated legal proceedings against DCG, the parent firm of Grayscale, Genesis, and Gemini.

The core of the NYAG’s allegation is that Gemini and Genesis engaged in deceptive practices regarding their collaborative product, ‘Earn.’ 

This scheme involved Gemini transferring customer funds to Genesis, which were then lent to various parties. 

Notably, the unsuccessful cryptocurrency trading entities Three Arrows Capital and Alameda Research borrowed money from Genesis.  

These transactions were conducted without transparent communication to the public.

Further complicating the matter, Gemini and Genesis faced legal repercussions from the SEC concerning the ‘Earn’ product earlier in January. 

Since then, there has been an ongoing dispute, each seeking to avoid blame for the mishandling of user assets.

Grayscale Scores Another Win Against The SEC

The U.S. Court of Appeals for the D.C. Circuit has directed a mandate affirming its August decision. 

The mandate states that the SEC must revisit Grayscale Investments’ application to transition its primary GBTC fund into a spot Bitcoin ETF. 

This anticipated procedural step comes from the SEC’s disclosure that it decided not to contest the court’s ruling the previous week. 

Grayscale responded by submitting a new application for the fund conversion.

However, it’s unclear if the SEC will find other reasons to reject the application.

Do you believe Grayscale will overcome the SEC’s challenges and dominate as a Bitcoin spot ETF?

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