Polkadot News Today: Grayscale Bets Big as SEC Tightens Grip on Altcoin ETFs

Grayscale’s Spot DOT ETF: A Pivotal Delay Extends Regulatory Scrutiny

Grayscale Investments has submitted S-1 registration forms with the U.S. Securities and Exchange Commission (SEC) for spot Polkadot and Cardano exchange-traded funds (ETFs), joining a growing list of 92 pending crypto ETF applications. The firm has incorporated the Grayscale Cardano Trust ETF (GADA) and Grayscale Polkadot Trust ETF as Delaware Statutory Trusts on August 12, 2025, signaling a strategic move to expand its altcoin product suite. These filings place Grayscale at the forefront of an increasingly competitive landscape for institutional exposure to alternative cryptocurrencies [1].

The Cardano ETF, which will trade on NYSE Arca under the ticker GADA, is part of a broader trend of optimism in the approval prospects for altcoin ETFs. Prediction markets, such as Polymarket, indicate strong expectations, with Solana at a 99% approval probability for 2025 and Dogecoin at 82%. Grayscale is also pursuing approval for a Dogecoin ETF with the ticker GDOG, entering the fray against competitors like Rex-Osprey and Bitwise. The firm's aggressive expansion strategy includes converting five existing trusts into ETF structures, covering Litecoin, Solana, Dogecoin, XRP, and Avalanche [1].

Despite the enthusiasm, the Grayscale ETF proposals face significant regulatory uncertainties, particularly regarding the SEC’s classification of certain tokens. The Cardano filing explicitly warns that a final determination by the SEC classifying ADA as a security could result in material adverse impacts on token value and potentially lead to the termination of the trust. This uncertainty is a recurring theme in the crypto ETF space, as the SEC continues to refine its regulatory approach to digital assets [1].

The proposed ETFs operate through cash-only creation and redemption mechanisms, with shares processed in baskets of 10,000 units through authorized participants and liquidity providers. In-kind transactions, involving the direct deposit of tokens, remain unavailable until “In-Kind Regulatory Approval” is secured—approval that may never materialize given the current regulatory climate. Valuation for the funds relies on CoinDesk price indices, calculated daily at 4:00 PM New York time, adding an additional layer of market dependency [1].

Grayscale’s Polkadot Trust has staking capabilities contingent on undefined conditions, currently unmet, and anticipates staking up to 85% of holdings through provider-facilitated arrangements. However, the 28-day unbonding periods associated with this model introduce liquidity constraints. The broader implications for investors hinge on the SEC’s final review and the evolving regulatory landscape for digital assets. The agency has outlined a significant agenda under its Project Crypto initiative, aiming to establish clearer guidelines for digital asset issuance and trading [7].

Institutional investors are increasingly interested in diversified crypto products. Bloomberg ETF analyst James Seyffart highlighted that basket products containing multiple cryptocurrencies are expected to attract more capital than individual altcoin ETFs. Grayscale and Bitwise have submitted such products for SEC approval, with Seyffart noting that investment advisors are leaning toward diversification over concentrated positions in single altcoins. The SEC’s new framework for cryptocurrency ETFs positions approximately ten assets for immediate approval, including Polkadot and Solana, with additional tokens like Cardano and XRP likely to follow once futures contracts meet CFTC requirements [4].

As the regulatory environment continues to evolve, the path for Grayscale’s Polkadot and Cardano ETFs remains uncertain. The SEC’s recent legislative updates, such as the GENIUS Act, aim to establish clear rules for stablecoin issuance and promote market transparency. These developments, alongside the broader federal coordination efforts, could shape the future of crypto ETFs in the United States and influence global regulatory approaches [6].

Source:

[1] Grayscale Submits Polkadot and Cardano ETF Registration (https://finance.yahoo.com/news/grayscale-submits-polkadot-cardano-etf-140711224.html)

[2] Grayscale Ethereum Covered Call ETF (ETCO) (https://etfs.grayscale.com/etco)

[3] Grayscale's new ETF targets income from Ethereum's Changing Tides (https://cryptoslate.com/grayscales-new-etf-targets-income-from-ethereums-changing-tides/)

[4] Bloomberg analyst says altcoin ETF approvals unlikely to replicate Bitcoin’s success (https://finance.yahoo.com/news/bloomberg-analyst-says-altcoin-etf-203041252.html)

[5] Polkadot ETF, $6M Paraguay Plan: DOT Price to Pump or Collapse (https://99bitcoins.com/news/presales/polkadot-etf-filing-6m-paraguay-token-hub-is-dot-price-set-to-explode-or-collapse/)

[6] Cryptocurrency Regulation: A Guide to U.S. & Global Policies (https://www.britannica.com/money/cryptocurrency-regulation)

[7] SEC Pushes Forward With Sweeping Crypto Rulemaking Plan (https://finance.yahoo.com/news/sec-pushes-forward-sweeping-crypto-235349699.html)