SEC Reviews Grayscale Cardano ETF Proposal Amidst Growing Institutional Interest

• The SEC acknowledged NYSE Arca’s proposal to list the Grayscale Cardano Trust, setting the stage for regulatory review.
• If the SEC approves the ETF, it would provide institutional exposure to ADA without direct ownership.

The U.S. SEC has officially acknowledged NYSE Arca’s filing to list and trade the Grayscale Cardano Trust as a spot exchange-traded fund (ETF). The bold decision was made on Feb. 24 and starts the clock for the SEC’s review process, which sets the stage for what could be a historical moment for Cardano (ADA) approval in traditional finance. 

This acknowledgment signals growing regulatory openness towards crypto ETFs under the new SEC leadership. Notably, multiple similar filings for Ripple (XRP), Dogecoin (DOGE), and Hedera (HBAR) are also under SEC review.

Grayscale Expands Beyond Bitcoin and Ethereum

Grayscale, the largest digital asset manager, has steadily expanded its ETF ambitions beyond Bitcoin (BTC) and Ethereum (ETH). The Grayscale Cardano Trust, if approved, would track ADA’s market price through a daily index surveying major exchanges, including Coinbase, Kraken, Crypto.com, and Bitfinex.

“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.

The proposed ETF designates Coinbase Custody Trust Company as the custodian and BNY Mellon Asset Servicing as the administrator.

While Bitfinex is included in the ETF’s index due to its liquidity, its lack of U.S. licensing may pose regulatory challenges. This raises regulatory questions, but Grayscale’s confidence in the SEC’s changing stance suggests that such hurdles may not be deal-breakers.

A Broader Shift in U.S. Crypto Regulations

This ETF filing comes amid a broader shift in U.S. crypto policy. Under acting SEC Chair Mark Uyeda, the agency has scaled back enforcement actions against major crypto firms, including Coinbase and Robinhood. This regulatory relaxation has led to an influx of ETF applications, with the SEC acknowledging half a dozen crypto-related ETFs in recent weeks.

If the U.S. SEC ultimately approves the Grayscale Cardano (ADA) ETF, it could pave the way for other altcoin ETFs. This would make it easier for traditional investors to gain exposure to Cardano without directly holding the asset.

Despite the regulatory progress, ADA’s price remains a little unmoved yet. At the time of the acknowledgment, Cardano was trading at $0.6833, reflecting an 8.97% daily decline.

Meanwhile, analysts point to broader market bearishness and a lack of immediate liquidity influx from ETFs as reasons for the price stagnation. However, many believe a final approval could serve as a major catalyst for ADA’s long-term growth.

Looking ahead, the SEC’s decision will be influenced by its stance on the existing crypto ETFs and how Grayscale effectively addresses concerns around market manipulation.

While the review process is officially underway there is heavy optimism about its approval. However, the next few months could prove pivotal for Cardano and the broader altcoin ETF market.

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