SEC Acknowledges Grayscale's Cardano ETF Proposal

The U.S. Securities and Exchange Commission (SEC) has acknowledged a proposal by NYSE Arca on behalf of crypto asset manager Grayscale to list and trade a spot Cardano exchange-traded fund (ETF). This marks the first step towards potential approval of the ETF, which aims to track the price of Cardano through an index that surveys its price daily on major crypto exchanges.

The proposed ETF, Grayscale Cardano Trust, will not directly hold Cardano (ADA) but rather provide investors with a cost-effective and convenient way to gain investment exposure to ADA. Coinbase Custody Trust Company is listed as the proposed custodian, while BNY Mellon Asset Servicing will serve as the transfer agent and administrator.

The SEC's acknowledgment comes amid a surge in crypto ETF proposals, including Cboe's XRP ETF, Grayscale's spot XRP and Dogecoin ETFs, and Nasdaq's filing to position and exercise limits on options tied to BlackRock's iShares Bitcoin Trust (IBIT). Additionally, the SEC has acknowledged several other exchange filings related to cryptocurrency ETFs in recent days, including staking, options, in-kind redemptions, and new types of altcoin funds.

The proposed ETF will track the price of Cardano through an index that surveys its price every day on crypto exchanges, such as Coinbase, Crypto.com, Bitfinex, and Kraken. The exchanges were chosen based on being in material compliance with applicable US federal and state licensing requirements. Bitfinex, which does not hold any licenses or registrations in the US, was included because it met the "minimum liquidity requirement."

Investors in the ETF will not directly hold Cardano (ADA) but will instead have shares in the trust. The SEC's acknowledgment of the proposal means the "clock" has started for the agency to eventually approve or reject the proposed ETF. The flood of crypto ETF acknowledgments from the new SEC leadership signals a growing interest in and acceptance of cryptocurrencies within the broader investment community.