The cryptocurrency market is abuzz with news that Grayscale Investments has filed an application with the U.S. Securities and Exchange Commission (SEC) to launch a Bitcoin cash ETF (Exchange Traded Fund) based on Cardano (ADA). The SEC acknowledged the application, paving the way for a potential approval that could radically transform Cardano’s accessibility and valuation. The move comes amid a surge in crypto ETF applications since the arrival of the new U.S. President, who is seen as supportive of digital assets.
Grayscale Cardano Trust: A Giant Step for ADA Adoption?
NYSE Arca, a subsidiary of NYSE Group, filed the application with the SEC on behalf of Grayscale on February 10. The SEC acknowledged the application on February 24, starting the countdown to an approval or rejection decision. The proposed ETF, called the Grayscale Cardano Trust, would track the price of Cardano through an index that analyzes its price daily on various crypto exchanges such as Coinbase, Crypto.com, Bitfinex, and Kraken. These exchanges were selected because they would be “in material compliance with applicable U.S. federal and state licensing requirements.”
It is important to note that investors in the ETF would not hold ADA directly, but rather units in the trust. “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. Coinbase Custody Trust Company is listed as the proposed custodian for the ETF, while BNY Mellon Asset Servicing is the transfer agent and administrator. Bitfinex, while not licensed or registered in the United States, was included because it meets the minimum liquidity requirements.
A Flood of Crypto ETF Applications: The Trump Effect?
Grayscale’s announcement comes amid a surge in crypto ETF applications since the new US president took office, who is seen as more favorable to cryptocurrencies. On February 24, the US stock exchange Nasdaq requested authorization to list an ETF holding the Hedera network’s native token, HBAR. In addition, on February 19 and 20, the SEC acknowledged receipt of half a dozen crypto-related ETF filings, covering a wide range of options such as staking, in-kind redemptions, and new types of altcoin funds.
The approval of a Cardano ETF could have major consequences for the cryptocurrency’s valuation and adoption. It would make it easier for institutional investors to access ADA, which could lead to a significant increase in demand. Additionally, this would strengthen Cardano’s legitimacy as an investment asset among the general public. However, it is important to remain cautious and closely monitor the SEC’s decision, as there is no guarantee that Grayscale’s application will be approved.
