Grayscale's attempt to convert its multi-token fund into an ETF might end up being successful, according to leading Eric Balchunas.

Earlier this week, the leading cryptocurrency-focused asset management firm filed to convert its Digital Large Cap Fund (GDLC) into an ETF. 

In August 2023, Grayscale managed to score a major court win against the SEC. After the regulator rejected the company's attempt to turn Grayscale Bitcoin Trust (GBTC) into an ETF. Grayscale then filed a lawsuit against the SEC in order to challenge the decision, and the court ended up siding with the company. Grayscale's legal triumph paved the way for the eventual approval of multiple Bitcoin ETFs in early January.

Later, the company went on to convert Grayscale Ethereum Trust (ETHE) into an ETF.

It is worth noting that Grayscale's ETFs were frequently viewed as bearish catalysts for the market due to their exorbitant outflows. 

Grayscale's GDLC offers exposure to Bitcoin and Ethereum as well as more arcane cryptocurrencies such as XRP and Solana (SOL).

If approved, the proposed ETF would provide investors with exposure to these tokens. 

Balchunas believes that there is "wiggle room" for an ETF to have a small portion of illiquid assets. This is why believes that such a product could be potentially approved by the SEC. "If so, it would leapfrog everyone in the race to put out a combo crypto ETF," he noted. 

Solana and XRP account only for 4.16% and 1.76% of GDLC's total holdings, respectively.

There are several ETF applications to launch Solana and XRP ETFs in the US. However, they are highly unlikely to secure the SEC's approval in the near future.