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Grayscale Seeks Regulatory Approval for First US Cardano Exchange-Traded Fund

10 hours ago
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TLDR

  • Grayscale and NYSE Arca filed a proposal with the SEC for the first Cardano-based ETF (GADA), which would hold ADA tokens and allow investors regulated exposure without direct ownership
  • The filing comes after Grayscale’s successful Bitcoin Trust ETF conversion and the SEC’s approval of Ethereum ETFs last year
  • ADA’s price jumped 12% to $0.748 following the ETF filing announcement, making it the top gainer among the top 10 cryptocurrencies
  • The trust will use Coinbase Custody for asset safekeeping and calculate daily NAV using prices from regulated exchanges like Coinbase and Kraken
  • Grayscale has also filed to convert other existing trusts into spot ETFs for cryptocurrencies including Solana, XRP, and Dogecoin

NYSE Arca filed a proposal with the Securities and Exchange Commission (SEC) on February 10, 2025, seeking approval to list and trade shares of the Grayscale Cardano Trust. The proposed ETF, trading under the ticker GADA, would be the first exchange-traded fund in the United States tied to Cardano’s ADA cryptocurrency.

The filing, submitted under NYSE Arca Rule 8.201-E for commodity-based trust shares, outlines a structure where each share would represent fractional ownership of the trust’s ADA tokens. This arrangement would allow investors to gain exposure to Cardano’s price movements through a regulated investment vehicle without directly holding the cryptocurrency.

Cardano, which launched in 2017, operates as a proof-of-stake blockchain platform that enables smart contracts and decentralized applications. Its native token, ADA, currently ranks as the ninth-largest cryptocurrency by market capitalization.

The market responded positively to the ETF filing news, with ADA’s price increasing by 12% to reach $0.748. This price movement made ADA the strongest performer among the top 10 cryptocurrencies by market value on the day of the announcement.

The proposed trust includes several key operational features. Coinbase Custody would serve as the custodian responsible for safeguarding the trust’s ADA holdings in cold storage. The trust would calculate its net asset value daily using an index price derived from multiple regulated cryptocurrency exchanges, including Coinbase and Kraken.

Delaware Trust Company would act as the trustee for the fund. Authorized participants, typically large financial institutions, would handle cash transactions for creating and redeeming shares of the trust.

The filing comes after Grayscale’s recent success in converting its Bitcoin Trust into an ETF. The firm currently manages over 20 crypto-related investment products, including trusts for various cryptocurrencies such as Avalanche, Solana, and Dogecoin.

The SEC has shown increasing openness to cryptocurrency ETFs, approving both Bitcoin and Ethereum spot ETFs in the past year. However, the regulatory body has historically been cautious about approving ETFs for cryptocurrencies beyond these two major assets, citing concerns about market manipulation and custody risks.

Under SEC rules, the regulatory body has 45 days to make an initial decision on the filing. During this period, they can choose to approve, deny, or extend their review of the proposal.

Grayscale has recently expanded its ETF efforts beyond Cardano. The firm has filed to convert several of its existing trusts into spot ETFs, including those for Solana, XRP, and Dogecoin. In late January 2025, Grayscale launched a Dogecoin Trust as a private placement, similar to how their Bitcoin and Ethereum ETFs began.

The proposed Cardano ETF aims to provide investors with a regulated way to invest in ADA through traditional brokerage accounts. This approach would eliminate the need for investors to manage cryptocurrency wallets or interact directly with cryptocurrency exchanges.

NYSE Arca’s filing emphasizes the availability of ADA price and market information through public websites and professional services, which they argue supports the ETF’s ability to operate fairly and protect investors.

If approved, the Cardano ETF would join Grayscale’s existing lineup of crypto ETFs, which includes the Grayscale Bitcoin Trust ETF, Bitcoin Mini Trust ETF, Ethereum Trust ETF, and Ethereum Mini ETF.

The Delaware Trust Company’s role as trustee and Coinbase Custody’s position as the custodian adds institutional backing to the proposed fund structure. These established financial institutions would provide oversight and security for the trust’s assets.

The SEC’s decision on this filing will be watched closely by market participants, as it could set a precedent for future cryptocurrency ETF approvals beyond Bitcoin and Ethereum.

Source: https://blockonomi.com/grayscale-seeks-regulatory-approval-for-first-us-cardano-exchange-traded-fund/