Grayscale is a cryptocurrency investment fund management company launched in 2013. It is owned by Digital Currency Group which also owns Coindesk, cryptocurrency news, and digital media organization.
Grayscale is no ordinary company. They manage investment funds in Ethereum, Ethereum Classic, Litecoin, XRP, Bitcoin Cash, Zcash, and Bitcoin. Today, they have $38.2 billion in assets under management.
So why is this company under the public eye right now?
It’s because they have started marketing their first exchange-traded fund. And Grayscale's plans are much bigger than we think as the ETF aims to invest in companies working to develop the digital economy.
The goal of the Grayscale Future of Finance ETF (GFOF) is clear, at least according to Dave LaValle. LaValle is the firm's global head of ETFs and he has had several comments about the ETF. In explaining it, he said the ETF focuses on companies that are changing the digital asset landscape.
He also clarified that the goal is to support progress, not duplicate the performance of cryptocurrency markets
Let's be honest: we've seen hundreds of products in this market, but few like GFOF.
Also, Grayscale is not looking to recreate bitcoin in the form of an equity ETF. There are already many companies working on it and Grayscale wants to go further. What they really want to do is define what the digital economy is.
Questions do remain — How will they define the digital economy, what does the GFOF do, who is going to manage it?
Well, everything is interconnected. The Grayscale Future of Finance ETF will track the Bloomberg Grayscale Future of Finance Index. The latter is made up of asset managers, exchanges, broker-dealers, and wealth managers who are focused on the digital economy.
The index will also track 22 companies associated with various stocks linked to crypto. But the focus is not simply crypto. They will also keep an eye on other institutions in the financial technologies space.
In addition, the Grayscale ETF will be distributed by Foreside Fund Services and will be managed by U.S. Bank. This not-so-small bank has stakes in Silvergate Capital, PayPal, Coinbase, Block, and Robinhood.
This index will consist of companies representing the three pillars of the "Future of Finance".
The first level is financial companies that enable the digital economy. Asset managers, exchanges and brokerages, and wealth managers are some of them.
The second tier is organizations providing technology to support the digital economy through data and processing. Simply put, technology solutions companies.
The third tier is digital asset infrastructure companies. For example, companies involved in mining, energy management, and operations power the digital asset ecosystem.
However, not all that glitters is gold. For one thing, Bloomberg has some indexes that offer exposure to a variety of cryptocurrencies. Also, such products provide the most concentrated and diversified equity exposure.
Yet, this product provides limited exposure to a specific kind of company. That is, companies are exposed to the digital economy. So, if the digital economy is having a hard time, the ETF will also suffer price-wise.
All in all, this is a very important milestone. Grayscale Investment took an important step by creating the Exchange Traded Fund. This product will give us a better outlook on where the future is going — even if it will not change the course of the digital economy.
However, it is not a perfect product. It does not pretend to follow the structure of bitcoin and other cryptocurrencies. Also, it will give exposure to some companies, but it does not allow other companies to have the same level of exposure.
Perhaps the last thing we mentioned is something they need to look into further. Maybe they will think about incorporating it further down the road. This ETF has only recently been launched, so it remains to be seen how it will perform and whether it actually achieves its goal.
Only time will tell.
