21Shares Files for Spot Polkadot ETF Amid Growing Crypto ETF Interest
Asset management firm 21Shares has filed with the US Securities and Exchange Commission (SEC) to launch a spot Polkadot ETF (exchange-traded fund).
According to a Jan. 31 SEC filing, the firm intends to list the 21Shares Polkadot Trust on the Cboe BZX exchange, with cryptocurrency exchange Coinbase acting as the DOT custodian.
The filing marks a notable expansion for 21Shares, which had already made history in February 2021 by launching the world’s first Polkadot ETP on the Swiss SIX exchange. If approved, the new spot ETF will offer US investors regulated exposure to Polkadot (DOT), a blockchain network designed for interoperability and scalability.
Market Uncertainty and the Future of a Polkadot ETF
Despite Polkadot being the 18th largest cryptocurrency by market capitalization, its price performance has been underwhelming in recent months. Over the past year, DOT has declined 5.16%, with an additional 10.48% drop in the last month, according to CoinMarketCap.
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While the filing signals confidence in the future of a Polkadot ETF, the document itself warns of no guaranteed price stability for DOT in the short or long term.
“There is no assurance that DOT will maintain its value in the long or intermediate term. In the event that the price of DOT declines, the Sponsor expects the value of the Shares to decline proportionately,” the filing stated.
Bloomberg ETF analyst James Seyffart echoed this sentiment, emphasizing that the market will ultimately determine whether a Polkadot ETF has demand.
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“The market will decide where value lies and if there’s value in launching such a product. If no one puts money into a Polkadot ETF — it will close. People are free to launch whatever ETFs are deemed to be allowed by the SEC,” Seyffart said in a Jan. 31 X (Twitter) post.
Regulatory Hurdles and Security Concerns
One of the key risks outlined in the filing is the potential classification of DOT as a security under US federal laws. If regulators were to deem Polkadot a security, the ETF could face significant legal and operational challenges. Additionally, the filing highlighted concerns regarding the increasing supply of DOT in circulation, which could impact its price stability.
However, the Web3 Foundation, which supports Polkadot, has previously pushed back against security classifications. In February 2023, the foundation argued that it had taken steps to decentralize the distribution of DOT tokens, ensuring no single entity holds a controlling stake. It also rejected offers from venture capitalists seeking to acquire DOT solely for investment purposes.
A Shifting Landscape for Crypto ETFs
The 21Shares filing comes at a time of growing interest in crypto-based ETFs, particularly following SEC Chair Gary Gensler’s resignation on Jan. 20. Gensler’s departure has sparked a wave of new ETF applications, signaling a possible shift in regulatory attitudes toward cryptocurrency investment vehicles.
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On Jan. 21, Osprey Funds and REX Shares filed to launch ETFs for meme coins like Dogecoin (DOGE), Official Trump (TRUMP), and Bonk (BONK). Additionally, the SEC recently approved the Bitwise Bitcoin and Ethereum ETF, allowing investors to gain exposure to both BTC and ETH within a single fund.
As the market awaits a final decision on the 21Shares Polkadot ETF, the outcome could provide further insight into the SEC’s evolving stance on crypto ETFs and whether alternative blockchain networks beyond Bitcoin and Ethereum will gain mainstream investment approval.
