Polkadot News Today: Regulators' Delays Fuel Betting Bonanza in Altcoin ETFs

The U.S. Securities and Exchange Commission (SEC) has postponed its decision on the Grayscale Polkadot Trust, contributing to a broader backlog of regulatory activity in the altcoin exchange-traded fund (ETF) landscape. The filing for the Grayscale Polkadot Trust ETF, along with the Grayscale Cardano Trust ETF, entered a growing list of 92 ETF applications currently under review by the SEC [1]. The trusts were incorporated as Delaware Statutory Trusts on August 12, 2025, following a standard process for Grayscale's ETF proposals [1]. Both ETFs are structured to track the performance of their respective cryptocurrencies, Polkadot (DOT) and Cardano (ADA), and are designed to operate under a cash-only creation and redemption mechanism [1].

The regulatory delay aligns with heightened expectations among market participants for the approval of altcoin ETFs. Prediction markets such as Polymarket reflect growing optimism, with the approval odds for XRP ETFs rising to 87%, up from 64% in August. Similarly, Solana ETFs are seen with a 99% approval probability for 2025 [1]. Even Dogecoin, a speculative memecoin, commands an 82% approval likelihood, nearly doubling from 44% in June. This trend underscores a broader market readiness for altcoin ETFs, with investors anticipating diversified exposure to the evolving crypto asset class [1].

Grayscale’s strategy to convert existing trusts into ETF structures includes Litecoin, Solana, Dogecoin, XRP, and Avalanche. The firm recently filed for Dogecoin ETF approval with the ticker GDOG, entering into a competitive space that includes applications from Rex-Osprey and Bitwise [1]. The firm is also navigating regulatory uncertainties, particularly with the Cardano Trust, which faces potential termination if ADA is ultimately classified as a security by the SEC [1]. Such regulatory risks are explicitly outlined in the filings and highlight the complex interplay between crypto regulation and market innovation.

In terms of operational structure, the Polkadot and Cardano trusts rely on CoinDesk price indices for valuation purposes, calculated daily at 4:00 PM New York time. The Polkadot trust anticipates staking up to 85% of holdings through third-party providers, with 28-day unbonding periods that could limit liquidity [1]. Both funds, however, currently lack in-kind transaction capabilities, pending a regulatory approval that may not be granted [1].

Analysts remain cautiously optimistic. Nate Geraci, co-founder of the ETF Institute, noted that market participants may be underestimating the demand for altcoin ETFs, drawing parallels to the success of Bitcoin and Ethereum ETFs. Recent updates to XRP ETF filings have been interpreted as positive signals, with approval odds reaching 95% on Polymarket [2]. The potential inflow of capital is also projected to be substantial, with JPMorgan forecasting up to $8 billion in inflows to XRP ETFs in the first year of trading [2]. These figures highlight the scale of opportunity in the altcoin ETF market, particularly as regulatory clarity becomes a focal point for both issuers and investors.

Source:

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

[2] XRP ETF approval seen to unlock $5bn bonanza, but 'people ... (https://finance.yahoo.com/news/xrp-etf-approval-seen-unlock-121250497.html)