Grayscale Teams Up with FTSE Russell for Diverse Crypto Indices

Grayscale Investments has partnered with FTSE Russell, a subsidiary of the London Stock Exchange, to dive into the crypto indices sphere. They plan to introduce a product known as the Crypto Sector Index Series. This series will feature several indices, focusing on different categories of digital assets based on their specific use cases.

Grayscale Unveils New Digital Asset Classes

The unique indices will classify digital assets into various groups. These include widely recognized cryptocurrencies like bitcoin and litecoin, smart contract ventures such as ether and Solana, and tokens tied to financial services like uniswap and compound. Additionally, the indices will cover coins linked to art, gaming, and media, along with those connected to practical applications like Chainlink and Filecoin.

Inkoo Kang, Grayscale’s director of ETFs, revealed the methodology behind the asset weighting within these indices. The strategy employs the square root of each cryptocurrency’s market capitalization, ensuring dominant cryptocurrencies like Bitcoin do not disproportionately influence the entire category. Consequently, investors will benefit from more diversified exposure.

Legal Issues Shadow Grayscale’s Expansion Efforts

However, Grayscale’s recent strides come alongside legal hurdles. Last week, New York Attorney General Letitia James brought a complaint against Grayscale’s parent company, DCG, and its other affiliate, Genesis. The filing also named the crypto exchange Gemini and prominent executives within these organizations.

The crux of the issue lies in the controversy surrounding the Earn product, a joint venture between Genesis and Gemini. The NYAG argued that the firms deceived the public regarding the nature of this product, resulting in significant user fund misappropriations. These legal proceedings underscore the complexities facing Grayscale and affiliated entities as they expand their product offerings.

Court Backs Grayscale’s Bitcoin ETF Application

In parallel to these challenges, Grayscale’s renewed prospect in the ETF domain. The U.S. Court of Appeals for the D.C. Circuit recently mandated the SEC to reconsider Grayscale Investments’ spot Bitcoin ETF application. This directive follows observations regarding the resemblance between Grayscale’s proposal and the already approved Bitcoin futures ETFs.

The court stressed the consistency in market misconduct identification capabilities between the two products. Hence, it recognized the necessity for Grayscale’s offering to receive approval. This development could pave the way for an expanded presence of Grayscale in the crypto investment arena, notwithstanding the existing legal confrontations.