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- The SEC has acknowledged NYSE Arca’s proposal to list a spot Cardano ETF by Grayscale, marking a key regulatory step.
- This move comes amid a surge in crypto ETF applications, including proposals for XRP, Dogecoin, and HBAR-based ETFs.
- If approved, the Cardano ETF would allow investors to gain exposure to ADA without directly holding the cryptocurrency.
The US Securities and Exchange Commission (SEC) has officially acknowledged NYSE Arca to trade and list a spot Cardano exchange-traded fund (ETF) on behalf of the digital asset firm Grayscale. This is the first move toward a potentially long process toward approval, and it primes the ground for additional institutional acceptance of Cardano (ADA).
The SEC’s acknowledgment of February 24 effectively commences the countdown period during which the governing agency will either approve or disapprove the proposed ETF. This does not guarantee final approval, but it signifies a crucial milestone toward Grayscale’s mission of making Cardano part of general investment portfolios.
This comes amidst a wave of crypto ETF submissions during the SEC’s revamped management, marking a friendlier tone toward cryptocurrencies. Among the recent submissions, Cboe has filed an XRP ETF, Grayscale has filed spot XRP and Dogecoin ETFs, and Nasdaq has filed options tied to BlackRock’s iShares Bitcoin Trust (IBIT).
NYSE Arca, a subsidiary of the NYSE Group, first applied with a bid to list the shares of the Grayscale Cardano Trust on the exchange on 10 February. The exchange will track the daily price of Cardano based on the major exchange crypto data of Coinbase, Crypto.com, Bitfinex, and Kraken if the application is approved. The exchanges were selected based on the fact that they follow US federal and state licensure rules and will thus be providing a stable price index.
New Cardano ETF Proposal Invest in ADA Without Crypto
Unlike directly purchasing Cardano, investors in the proposed ETF would gain exposure to ADA through shares in the Grayscale Cardano Trust. According to the filing, this structure offers a “cost-effective and convenient” means of accessing Cardano without the complexities of managing a crypto wallet or navigating exchange risks.
“An investment in the Shares is not a direct investment in ADA; the Shares are designed to provide investors with a cost-effective and convenient way to gain investment exposure to ADA,” the filing states.
To further ensure security and regulatory compliance, Coinbase Custody Trust Company is listed as the fund’s proposed custodian, while BNY Mellon Asset Servicing will act as the transfer agent and administrator. Notably, Bitfinex, which lacks U.S. licensing, was still included in the index due to meeting the minimum liquidity requirements.
Crypto ETFs Surge Under Trump Administration
Increased efforts at crypto ETFs followed the inauguration of US President Donald Trump, and the latter administration has been more amenable to cryptocurrencies than the previous administration. This has sparked a spate of ETF applications, with asset managers vying with each other to introduce digital assets into the mainstream world of finance.
In another major move, on February 24, Nasdaq filed for permission to list an ETF based on the Hedera Network’s native token, HBAR. Meanwhile, just days earlier, the SEC acknowledged a slew of crypto-related filings, including staking-based ETFs, crypto options, in-kind redemptions, and new altcoin funds.
While the SEC approval does not necessarily guarantee approval, it marks a turning point for Cardano and the space at large. Grayscale’s Cardano ETF approval will potentially be a precursor to further spot altcoin ETFs that will introduce further capital into the space and further legitimize the place of digital assets within the investment asset class.
With the SEC actively reviewing a multitude of crypto ETF proposals, the coming few months may be a turning point in the institutional take-up of crypto. Market participants and investors will be closely watching the regulatory agency weighing this and the remaining pending proposals.
Related | Bitcoin ETF Outflows: Is BTC’s Bull Market in Danger?
