Planned Cardano ETF signals a Grayscale strategy shift?
Grayscale Investments has historically had a four-stage lifecycle for its products, but there’s an indicator this could be changing
Voar Designs/Shutterstock modified by Blockworks
This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.
Grayscale Investments has historically had a four-stage lifecycle for its products. A recent Cardano ETF filing signals that could be changing as regulatory winds shift.
The company typically first goes with private placement launches for accredited investors (like the Dogecoin Trust it launched a couple weeks ago).
Step two is obtaining public quotations for unrestricted shares of those private placements.
Grayscale then makes its products SEC-reporting companies, subjecting them to more disclosure and regulatory oversight.
Finally, it looks to uplist its products to an ETF when the regulatory environment allows for it (think last year’s conversions of GBTC and ETHE).
“Given the environment is rapidly evolving before our eyes, there may now be a few shortcuts appearing,” said Nate Geraci, president of The ETF Store.
Indeed, Grayscale appears to be skipping these steps in its quest to launch an ETF holding cardano (ADA). See NYSE’s 19b-4 filing for listing the planned product here.
Grayscale does not currently have a trust holding ADA. And so, the direct filing for an ETF could signal optimism the SEC “is now open for business” and could move quickly to approve more spot crypto funds beyond bitcoin and ether, Geraci said.
The firm did not return a request for comment.
Various fund managers have live proposals for ETFs holding litecoin, solana, XRP and other crypto assets. We recently reported on the possible odds of those launching this year.
To Geraci’s point, Bryan Armour, a director of passive strategies research at Morningstar, said he expects Grayscale to file directly for ETFs if the firm expects approval. The private trust/OTC route only makes sense if funds holding those assets are deemed “unavailable” from a regulatory standpoint, he added.
Geraci doesn’t exactly agree on that second point.
From a competition perspective, Geraci explained, he likes the idea of Grayscale bringing a private placement offering to market first (like it did with its latest DOGE Trust).
“It offers them the ability to get a head start on attracting assets prior to converting into an ETF,” he explained. “They can essentially front-run the competition.”
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
- Empire: Crypto news and analysis to start your day.
- Forward Guidance: The intersection of crypto, macro and policy.
- The Drop: Apps, games, memes and more.
- Lightspeed: All things Solana.
- Supply Shock: Bitcoin, bitcoin, bitcoin.
