Institutional and retail investors are seeking greater regulated exposure to cryptocurrencies, as investment firms explore potential approval of spot ETFs for Cardano (ADA), Ripple (XRP) and Solana (SOL) to boost market access.
Growing interest in exchange-traded funds (ETFs) that track the performance of alternative cryptocurrencies to Bitcoin and Ethereum is on the rise.
The New York Stock Exchange recently filed a new application with the United States Securities and Exchange Commission (SEC) for the creation of a Cardano-based spot ETF, currently listed among the top 10 cryptocurrencies in the industry, by Grayscale Investments, one of the largest digital asset investment firms.
This application adds to those submitted by several investment firms that are actively exploring the creation of new spot ETFs based on cryptocurrencies such as Ripple (XRP) and Solana (SOL), among others, seeking to capitalize on the evolving regulatory landscape and growing demand from institutional and retail investors for this asset class. This growing interest responds to the need to offer regulated and accessible avenues for exposure to the broader cryptocurrency market.
SOLANA BUYSIn parallel, cryptocurrencies are also attracting the attention of state administrations. A prominent example is North Carolina, where state lawmakers are considering a new bill that seeks to authorize the State Treasurer to invest in select digital assets through approved exchange-traded funds. This initiative reflects a broader trend among U.S. states seeking to diversify their investment portfolios and take advantage of the growth potential offered by digital assets.
Possible regulatory approval of new cryptocurrency spot ETFs
Following the approval of Bitcoin Spot ETFs and Ethereum Spot ETFs last year, the attention of investment firms and possibly investors has shifted to other cryptocurrencies with the potential to be tracked by these types of financial instruments.
Bloomberg analysts James Seyffart and Eric Balchunas have noted that exchange-traded products based on XRP, Solana, Dogecoin, and Litecoin have “high chances” of obtaining the necessary approvals, amid growing demand. The analysts’ optimism is based on a number of specific factors, including the shift in regulatory sentiment and the rise in interest from retail and institutional investors in the crypto market.
The possibility of ETFs based on these cryptocurrencies being approved could open the doors to the market, providing investors with an easier and more accessible way to gain exposure to these crypto assets, and further boosting their adoption and liquidity. Furthermore, the approval of these ETFs could be seen as a sign that cryptocurrencies are gaining acceptance and legitimacy as an asset class in the country and the world.
Cardano in the spotlight of spot ETFs
The New York Stock Exchange, NYSE, through its subsidiary NYSE Arca, has filed an application to create a Cardano spot exchange-traded fund on behalf of Grayscale. The Form 19b-4 filing is a crucial step in the process of getting a cryptocurrency ETF approved by the Securities and Exchange Commission. While the filing has not yet been approved, the NYSE argues that listing and trading an ADA-based product would enhance competition among market participants, benefiting investors and the market at large.
ADA, the native cryptocurrency of the Cardano network, is the ninth-largest cryptocurrency in the industry, with a market capitalization of over $28.000 billion, according to price data from CoinMarketCap.
Source: CoinMarketCap
NYSE Arca's spot ETF filing comes at a time when several firms are stepping up efforts to gain approval for various cryptocurrency exchange-traded funds.
North Carolina seeks to lead digital asset investment
In North Carolina, lawmakers are seriously considering investing in digital assets. State House Speaker Destin Hall has introduced a bill proposing to authorize the state Treasurer to invest in “qualifying digital assets.” According to the legislative proposal, the bill seeks to diversify the state’s portfolio by investing up to 10% of the state’s fund in crypto assets such as Bitcoin.
The move by North Carolina joins more than a dozen other US states that are considering similar bills and seeking to gain exposure to cryptocurrencies, either through exchange-traded funds or by creating strategic Bitcoin reserves.
Regulatory change at the SEC
The optimism surrounding the approval of new cryptocurrency ETFs is based on the fact that the composition of the SEC could become more crypto-friendly under the new administration. While it is true that this agency has proven to be cautious in its approach towards digital assets, the arrival of a new chairman and the recognition of several of the funding applications, along with the approval of the Bitcoin and Ethereum spot ETFs, are setting an important precedent, which could pave the way for the approval of other cryptocurrency financial instruments.
Against this backdrop, the cryptocurrency ETF landscape is undergoing a significant transformation. The pursuit of regulatory approval for new cryptoasset products reflects a growing appetite from institutional and retail investors to gain exposure to the cryptocurrency market in a regulated and accessible manner. Furthermore, North Carolina’s move to explore investment in digital assets through ETFs underscores an emerging trend among state governments to diversify their portfolios and enter the world of cryptocurrencies.
PREPARE YOUR WALLETWhile regulatory challenges remain, the momentum towards the adoption of cryptocurrency spot ETFs seems unstoppable, which could have a significant impact on the future of the digital asset market.
