Is a Cardano ETF on the Horizon? SEC Takes First Step Toward Approval

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The U.S. Securities and Exchange Commission (SEC) has acknowledged NYSE Arca’s proposal to list and trade shares of the Grayscale Cardano Trust, marking the initial step toward a potential spot Cardano ETF (exchange-traded fund).

While the SEC’s acknowledgment on Feb. 24 does not equate to approval, it triggers a formal review process that will ultimately determine the fate of Grayscale’s Cardano ETF. If approved, the ETF will track the price of Cardano (ADA) through an index that aggregates data from major cryptocurrency exchanges, including Coinbase, Crypto.com, Bitfinex, and Kraken. These exchanges were selected based on their compliance with U.S. federal and state licensing regulations.

How Does the Grayscale Cardano ETF Work?

Unlike directly purchasing ADA, investors in the Grayscale Cardano Trust would gain exposure to the cryptocurrency through shares in the trust, eliminating the need to manage the digital asset themselves. According to Grayscale’s filing, “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 proposed ETF names Coinbase Custody Trust Company as its custodian, while BNY Mellon Asset Servicing will serve as the transfer agent and administrator.

Also read: Cardano vs Solana: An In-Depth Comparison of Blockchain Technologies

Growing Institutional Interest in Crypto ETFs

Grayscale’s Cardano ETF is part of a broader wave of cryptocurrency-related ETF filings submitted to the SEC in recent weeks. The regulatory body is currently reviewing multiple applications for both spot and derivative-based cryptocurrency ETFs, including those for XRP and Dogecoin. Additionally, Nasdaq recently filed to introduce an ETF based on Hedera’s native token, HBAR, reflecting increased institutional interest in crypto investment products.

On Feb. 19 and 20, the SEC acknowledged several filings related to cryptocurrency ETFs, covering staking, options trading, in-kind redemptions, and altcoin funds. This surge in filings suggests a shifting regulatory landscape and a potential acceleration of crypto-focused financial products in traditional markets.

Also read: ETPs vs ETFs: Which One Fits Your Investment Strategy?

What Comes Next?

The SEC now has a set timeframe to evaluate the proposal, during which it may approve, reject, or extend its decision. While regulatory hurdles persist, industry experts believe that the success of Bitcoin spot ETFs could pave the way for other major cryptocurrencies, like Cardano, to gain similar approval.

Also read: Tuttle Capital Files 10 Leveraged Crypto ETFs, Including Trump-Themed Meme Coins

For investors and crypto enthusiasts, a spot Cardano ETF would mark a significant milestone, offering a regulated and institutionally-backed vehicle for ADA investment. As the SEC continues its review, the crypto industry eagerly awaits the next development in this evolving regulatory landscape.

Author

Steven Walgenbach

Steven's passion for cryptocurrency and blockchain technology began in 2014, inspiring him to immerse himself in the field. He notably secured a top 5 world ranking in robotics. While he initially pursued a computer science degree at the University of Texas at Arlington, he chose to pause his studies after two semesters to take a more hands-on approach in advancing cryptocurrency technology. During this period, he actively worked on multiple patents related to cryptocurrency and blockchain. Additionally, Steven has explored various areas of the financial sector, including banking and financial markets, developing prototypes such as fully autonomous trading bots and intuitive interfaces that streamline blockchain integration, among other innovations.

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