Polkadot ETF Proposal Submitted by 21Shares, Then What?

Bittime - 21Shares, a leading asset management company, has applied to launch exchange-traded fund (ETF) Polkadot (DOT) to the US Securities and Exchange Commission (SEC). If approved, this ETF will be listed on the Cboe BZX Exchange and Coinbase will act as custodian for the DOT assets held by the ETF.

Challenges Faced When Applying for a DOT ETF

This is not 21Shares' first attempt to launch a Polkadot-related investment product. In 2021, the company introduced the Polkadot ETP in Switzerland. However, launching in the US faces more complex regulatory challenges. 

DOT Prices Are Increasingly Decreasing

Despite the decline in DOT prices over the past year, 21Shares is proceeding with this filing noting that there is no guarantee of long-term price stability.

Read too Polkadot Soars to Become the King of Real Asset Tokenization!

Some Regulatory Oversight Risks and Legality of DOT ETFs

The filing also includes risks that need to be addressed, including possible regulatory oversight. Although the Web3 Foundation maintains that DOT is not a security, it is possible that DOT could be classified as a security under US law. Bloomberg analyst James Seyffart notes that the success of these ETFs will depend largely on investor demand; if interest is low, the fund will not survive.

Changing Market Context

21Shares' filing comes alongside a wave of new crypto ETF proposals following the resignation of SEC Chairman Gary Gensler. With other asset managers also seeking approval for Bitcoin, Ethereum and even memecoin ETFs, changes in the regulatory landscape could determine whether Polkadot will join the list of crypto assets that can be traded on the US market.

FAQ about Polkadot ETF Proposal by 21Shares

1. What is the Polkadot ETF proposed by 21Shares?

The Polkadot ETF proposed by 21Shares is an investment product that allows investors to purchase shares in a fund that holds Polkadot (DOT) assets. If approved, this ETF will be listed on the Cboe BZX Exchange and Coinbase will be the custodian for the assets.

2. What challenges did 21Shares face in proposing this ETF?

The main challenges facing 21Shares include strict regulations in the US and potential scrutiny from the SEC. Although the Web3 Foundation states that DOT is not a security, there is a risk that DOT could be classified as a security under US law.

3. Why does the success of this ETF depend on investor demand?

The success of the Polkadot ETF will depend largely on investor interest. If demand for an ETF is low, the fund may not stay on the market for long. This shows the importance of support and interest from the investment community for the continuity of the ETF.

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Reference

Kosta Gushterov, 21Shares Pushes for Polkadot ETF as U.S. Crypto Funds Gain Momentum, Accessed February 4, 2025

Author: IN