Grayscale has filed three Form RWs with the Securities and Exchange Commission (SEC) to officially withdraw its ETF applications for Cardano, Polkadot, and Hedera. This decision affects the Grayscale Cardano Trust ETF, Grayscale Hedera Trust ETF, and Grayscale Polkadot Trust ETF, which will no longer be launched.
The company has already listed ETFs for Bitcoin, Ethereum, Solana, and XRP, and this move is seen as a strategic decision to focus on more profitable products. The withdrawn applications were for altcoins with smaller market capitalizations, which may not have generated sufficient interest or revenue.
Background on ETF Applications
To launch an ETF in the US, a issuer must file a Form S-1, which details the product's structure, depositary, fees, and risks. The SEC must declare the registration statement effective before any shares can be traded. The Form RW is used to withdraw a registration statement, as per Rule 477 of the Securities Act of 1933.
Grayscale's decision may be due to the high costs associated with launching and maintaining an ETF, particularly for less popular assets. The company already charges a 1.5% fee for its GBTC product, compared to 0.15% for its Bitcoin Mini Trust.
Impact on Investors
For investors seeking to invest in Cardano, Polkadot, or Hedera through a traditional brokerage account, alternatives such as index funds or competing issuers' products are available. Grayscale's withdrawal of its ETF applications may benefit rival companies, such as Canary Capital, which has already launched a Hedera ETF, and 21Shares, which has an open application for a Polkadot ETF.
