Ranking 9th in the crypto hierarchy by market capitalization, Cardano is known as one of the most innovative and meticulously designed crypto projects to ever enter the market. Cardano’s methodical approach to development is based on rigorous research and the joint effort of top engineers and academics in the crypto and blockchain sphere. This implies that every update and upgrade must undergo thorough examination from industry experts before being implemented into the blockchain.
While the research-first philosophy that Cardano embraces may have slowed down its progress compared to other blockchain projects, it also allowed the creation of a robust infrastructure built on top of a solid scientific foundation, which helped Cardano climb to the top of the crypto ladder.
Now, eight years after its launch, Cardano is getting closer to reaching a new milestone in its evolution with the potential approval of the first-ever spot Cardano exchange-traded fund (ETF). Although no one knows exactly when or if spot Cardano ETFs will become a reality, the odds of approval seem to be quite high, sparking enthusiasm and optimism among Cardano supporters and crypto backers at large.
The road to spot Cardano ETFs
Just a few short years ago, the very idea of having a spot ETF based on Cardano would have seemed improbable if not downright impossible. However, that was before the surprising approval of spot Bitcoin and Ether-based ETFs by the US Securities and Exchange Commission (SEC). Last year, on January 10, after almost a decade of regulatory resistance, the SEC finally gave the green light for the launch of the first batch of spot Bitcoin ETFs. Shortly after this hard-earned milestone, the SEC made another unexpected move and proceeded to approve applications for spot Ether ETFs, which began trading in July 2024.
With Bitcoin and Ethereum finally breaking the ice by entering the spot ETF market, people naturally started turning their attention toward other cryptocurrencies that have the potential of being approved for these types of products. Following the success of spot BTC and ETH ETFs, a long list of digital currencies lined up to be considered for spot ETFs, with various asset managers filing multiple applications in this respect.
Among them, leading digital asset management firm Grayscale submitted an application with the SEC for a spot Cardano (ADA) exchange-traded fund on February 24. The regulator has a period of maximum 240 days to examine Grayscale’s proposal and come up with a decision. The verdict could come much earlier, but since the SEC has a history of postponing rulings, particularly regarding cryptocurrency-related filings, the process can extend until the final deadline, which if we calculate the length of the review period, would fall on October 22.
The odds are stacking up in Cardano’s favor
According to industry insiders, Cardano has real chances of joining the spot crypto ETF family. Data provided by prediction market platform Polymarket reveals that the probability of a spot Cardano ETF gaining regulatory clearance from the SEC before the end of the year has increased considerably recently. The odds of approval have surged to 55% from the 10% registered a few weeks ago.
Eric Balchunas, senior ETF Analyst at Bloomberg, delivered an even more hopeful forecast, projecting the likelihood of a favorable outcome at around 75%. The debut of a spot Cardano ETF will facilitate exposure to ADA and is expected to drive more institutional adoption since investors can easily and conveniently purchase these types of products through their traditional brokerage accounts, just as they do with stocks and bonds. As a result, the new capital flowing into the Cardano ecosystem would boost the price performance of its native token.
Balchunas also stated that it’s also possible for other spot crypto ETFs to receive consent from the SEC within the next few months. As mentioned earlier, spot Cardano ETFs are not the only proposals for crypto-related products currently waiting for SEC’s response. The agency has received applications for spot crypto ETFs based on various other altcoins, with XRP, Solana and Dogecoin among the most notable contenders.
In Cardano’s case specifically, the optimistic predictions are based on several factors, as follows:
Strong fundamentals
Cardano is definitely not just another crypto project that risks getting lost among all others. It’s a very distinct blockchain venture that has managed to differentiate itself from the rest through its unique vision and core principles. The unwavering commitment to innovation and the use of evidence-based methods for development, including peer-reviewed publications and collaborations with reputable professionals and organizations, has established Cardano as a powerful and reliable player in the crypto market. This is something that will definitely be taken into consideration by the agency during the review process.
Increased on-chain activity
The hopeful projections regarding spot Cardano ETFs are not fueled by wishful thinking and speculation, as some might assume. They are backed by hard data and positive signals, most notably the activity on the Cardano network which has intensified recently. The increase in daily transactions indicates steady user engagement and growing utility for the Cardano blockchain and its native token. A strong crypto with real-world utility is bound to be seen as safer and, therefore, more suitable for spot ETF products.
Prospects for the future
Cardano’s outlook for the future can also influence regulators’ decisions. While it’s difficult to predict what might happen with any crypto project in the long run, Cardano seems to be in a very good spot at the moment, which could ensure a prosperous future for the asset. Back in 2024, Charles Hoskinson, Cardano’s founder, boldly predicted that ADA is poised to dethrone crypto giants Bitcoin and Ethereum. Whether his prophecy will come true or not remains to be seen. For the time being, all we can say is that Cardano is indeed a one-of-a-kind project that has the potential to achieve great things, if all goes well.
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