Grayscale Investments has reportedly filed a request under the NYSE Arca to establish a Cardano (ADA)-based exchange-traded fund (ETF). This request has been made via the application of form 19b-4 and has been posted to the NYSE site for the institution to begin the SEC review process. Once approved, the Cardano ETF will be the first of its kind in ‘the US after Grayscale’s existing Bitcoin and Ethereum ETFs. The announcement about filing is already out in the market, with ‘Cardano going up by 12% to $0.748, as the best performer among the top 10 cryptocurrencies by market cap,’ according to CoinGecko.
Cardano ETF: A New Frontier for Institutional Crypto Investments?
Based on available data, the firm has been devoting efforts to transforming the existing crypto trusts of Solana, XRP, and Dogecoin into ETFs. The company is looking into new ways to increase institutional interest in crypto assets by developing more regulated investment products.
In a filing by Grayscale, they specifically indicated that the ETF format would provide a regulated and transparent mode through which investors could get into the native token of Cardano, ADA.
“The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest. There is a substantial amount of ADA price and market information available on public websites and through professional and subscription services.” — Grayscale, Cardano ETF filing
The Cardano ETF would be a trust, like Grayscale’s Bitcoin and Ethereum ETFs, with Delaware Trust Company as the trustee and Coinbase Custody Trust Company as the custodian to hold ADA in cold storage.
Will the SEC Approve the First Cardano ETF?
While pressure mounts on the SEC to offer ETFs on other key cryptocurrencies, currently, the Commission has only approved Bitcoin and Ethereum. In early 2024, a big win for institutional adoption happened with Grayscale’s Bitcoin Trust (GBTC) finally becoming an ETF. Grayscale boasts the largest portfolio of crypto investment vehicles, housing more than 20 products under its roof, and now it applies its excitement to the altcoin ETF arena. The company has submitted proposals for Solana (SOL), Dogecoin (DOGE), XRP (XRP), and Cardano ETF applications.
While some believe the regulatory environment is getting softer under the current administration, the SEC is still cautious about expanding crypto ETFs beyond Bitcoin and Ethereum.
According to ETF Store President Nate Geraci, the SEC is worried about liquidity, market manipulation and regulatory uncertainty regarding altcoin classifications.
“While Bitcoin and Ethereum are declared commodities, the SEC has not yet ruled if assets like Cardano, Solana and XRP are securities. Without further clarity from regulators, altcoin ETFs will be looked at with a magnifying glass.” — Nate Geraci, President of ETF Store
How a Cardano ETF could impact ADA?
If approved, the Cardano ETF could be a huge catalyst for ADA’s price growth, just like the Bitcoin ETFs, driving institutional inflows. Spot Bitcoin ETFs have already pulled in over $40 billion since their inception in 2024.
According to market analysts, a Cardano ETF would unlock billions of dollars and make ADA more accessible to traditional investors.
“An SEC approved Cardano ETF would bring in institutional demand, increase liquidity and price stability. We’ve seen this with Bitcoin ETFs and ADA could follow the same path.” — James Seyffart, ETF Analyst at Bloomberg
What’s next for Grayscale’s ETF expansion?
Grayscale is not stopping on Cardano. The company is working harder for the expansion of its crypto ETF offerings while a call for more diversified digital asset investment products leaves the company waiting for this to happen.
As stated by Michael Sonnenshein; the CEO of the company; they will converge into the marketplace with regulators to develop a more favorable environment for achieving compliance; with their standards while also developing further crypto-related financial products.
“We believe expanding access to crypto through ETFs is a key to mainstream adoption. Our goal is to bridge the gap between traditional finance and digital assets.” – Michael Sonnenshein, Grayscale CEO
Though the timeline is unknown, the crypto community will be watching what’s next from the SEC, for it will set the trend for all other altcoin ETFs after this.
Conclusion
The Grayscale Cardano ETF is a major watershed for institutional investments in crypto. If given the go-ahead, billions in institutional flows will pour in, enhancing ADA’s liquidity and paving the way for other altcoin ETFs.
The SEC’s stand on the other altcoin ETFs remains unclear, and so this application could serve as a potent litmus test for Cardano.
In the meantime;, while waiting for some clarity from the ‘SEC, investors are encouraged to remain abreast of significant developments and market sentiment, as well as the SEC’s ongoing assessment of crypto-financial products.
Stay updated with Deythere as we’re available around the clock, providing you with updated information about the state of the crypto world.
FAQs
1. What is a Cardano ETF?
A Cardano Exchange-Traded Fund (ETF) provides investors exposure to Cardano (ADA) without the option of holding the cryptocurrency outright. The ETF would trade on traditional exchanges that institutional or retail investors could access.
2. Why is Grayscale launching a Cardano ETF?
The company is expanding its crypto investment products and providing Cardano under controlled conditions to institutional clients. The company believe ADA has great market potential and a good fit in its growing ETF family.
3. Has the SEC approved any altcoin ETFs?
To date, the SEC has only approved Bitcoin and Ethereum ETFs. Other altcoin ETFs such as Solana, XRP and Dogecoin are pending.
4. How will a Cardano ETF affect the ADA price?
If approved, a Cardano ETF will increase ADA’s price through institutional investment, more liquidity and mainstream adoption. However, the probability of it being rejected or delayed may create short-term up-and-down movements in the ADA price.
5. When will the SEC decide on Cardano ETF?
The SEC review process for ETFs takes several months. Analysts predict a decision by 2025 but timelines are never exact.
Glossary
ETF (Exchange-Traded Fund): A ‘financial instrument that allows you to trade shares representing ownership of a pool of assets, such as cryptocurrencies, stocks or commodities.
Spot ETF: An ETF that holds the underlying ‘asset directly and not derivatives or futures contracts.
Custodian: A financial institution ‘that holds an investor’s assets, such as crypto or stocks.
SEC: The U.S. regulatory agency in charge’ of financial markets and investment products.
Liquidity: How easily an asset can’ be bought or sold without moving its price much. – Market Capitalization: The total value of a cryptocurrency, ‘which is found by multiplying the price of the asset times the circulating supply.
References
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