Nasdaq Files for SUI ETF Listing, Boosting Institutional Adoption

Nasdaq has filed a proposed rule change with the Securities and Exchange Commission (SEC) to list and trade shares of the 21Shares SUI ETF. This filing marks the formal start of the review process for the U.S. spot SUI ETF. The 21Shares SUI ETF is designed to track the performance of SUI, the native token of the Sui Network, as measured by the CME CF Sui—Dollar Reference Rate—New York Variant, adjusted for the Trust's expenses and other liabilities.

The Sui Network is a decentralized blockchain platform that supports a wide range of applications, particularly in the realms of decentralized finance (DeFi), non-fungible tokens (NFTs), and other blockchain-based services. It aims to address scalability and efficiency issues that have plagued earlier blockchain networks. The network employs a unique consensus algorithm that allows it to process a large number of transactions per second, making it suitable for applications that require high throughput, such as gaming and high-frequency trading.

The 21Shares SUI ETF is a passive investment vehicle that does not seek to generate returns beyond tracking the price of SUI tokens. It will not utilize leverage, derivatives, or any similar arrangements in seeking to meet its investment objective. The Trust's investment objective is to seek to track the performance of SUI, as measured by the Pricing Benchmark, adjusted for the Trust's expenses and other liabilities. The Pricing Benchmark is calculated by CF Benchmarks Ltd. based on an aggregation of executed trade flow of major SUI trading platforms.

The Trust will hold SUI and will value its Shares daily based on the Pricing Benchmark. Each of BitGo New York Trust Company, LLC and Coinbase Custody Trust Company, LLC is anticipated to be a SUI custodian for the Trust and will hold all of the Trust's SUI on the Trust's behalf. When the Trust sells or redeems its Shares, SUI will be transferred into or out of the Trust, as applicable, in exchange for blocks of 10,000 Shares that are based on the quantity of SUI attributable to each Share of the Trust.

The SUI Counterparty is a designated third party with whom the Sponsor has entered into an agreement on behalf of the Trust that will deliver, receive or convert to U.S. dollars the SUI related to the Authorized Participant's creation or redemption order. The Sponsor performs extensive due diligence as part of its SUI Counterparty selection and onboarding process. The Trust will create Shares by receiving SUI from a SUI Counterparty that is not the Authorized Participant, and the Trust—not the Authorized Participant—is responsible for selecting the SUI Counterparty to deliver the SUI.

The Trust's net assets and its Shares are valued on a daily basis with reference to the Pricing Benchmark, a standardized reference rate published by the Benchmark Provider, which is designed to reflect the performance of SUI in U.S. dollars. The Pricing Benchmark is calculated daily and aggregates the notional value of SUI trading activity across major SUI spot exchanges. The Sponsor believes that the use of the Pricing Benchmark is reflective of a reasonable valuation of the average spot price of SUI and that resistance to manipulation is a priority aim of its design methodology.

The Trust will provide information regarding the Trust's SUI holdings as well as additional data regarding the Trust. The website for the Trust, which will be publicly accessible at no charge, will contain the prior business day's NAV per Share, the prior business day's Nasdaq official closing price, calculation of the premium or discount of such Exchange official closing price against such NAV per Share, data in chart form displaying the frequency distribution of discounts and premiums of the Exchange's official closing price against the NAV, within appropriate ranges for each of the four previous calendar quarters, the prospectus, and other applicable quantitative information. The Trust will also disseminate the Trust's holdings on a daily basis on the Trust's website.

The intraday indicative value (IIV) will be calculated by using the prior day's closing NAV per Share as a base and updating that value during the Exchange's regular market session to reflect changes in the value of the Trust's SUI holdings during the trading day. The IIV disseminated during the Regular Market Session should not be viewed as an actual real-time update of the NAV, because NAV per Share is calculated only once at the end of each Exchange trading day based upon the relevant end-of-day values of the Trust's investments. The IIV will be widely disseminated on a per-Share basis every 15 seconds during the Regular Market Session through the facilities of the relevant securities information processor by market data vendors.

The Trust creates and redeems Shares from time to time, but only in one or more Baskets. Baskets are only made in exchange for delivery to the Trust or the distribution by the Trust of the amount of cash equivalent to the amount of SUI represented by the Baskets being created or redeemed. Authorized Participants are the only persons that may place orders to create and redeem Baskets. Authorized Participants must be registered broker-dealers or other securities market participants, such as banks and other financial institutions, which are not required to register as broker-dealers to engage in securities transactions described below, and DTC Participants. Authorized Participants will deliver only cash to create shares and will receive only cash when redeeming Shares. Further, Authorized Participants will not directly or indirectly purchase, hold, deliver, or receive SUI as part of the creation or redemption process or otherwise direct the Trust or a SUI Counterparty with respect to purchasing, holding, delivering, or receiving SUI as part of the creation or redemption process.

This filing marks a significant step in bringing SUI-related investment products to U.S. markets. The move to list the 21Shares SUI ETF potentially increases SUI's institutional adoption, reflecting broader market trends for crypto ETFs. The submission to the SEC involves a proposal to list the 21Shares SUI ETF, tracking the SUI token from the Sui blockchain. The filing is processed under the Commodity-Based Trust Shares framework. Entities involved include Nasdaq, 21Shares US LLC, and CSC Delaware Trust Company. The ETF will track SUI prices using the CME CF Sui—Dollar Reference Rate set by CF Benchmarks Ltd.

The introduction of this ETF may spur institutional investment in SUI, influencing asset demand in the crypto market. "The milestone with Nasdaq's 19b-4 filing with the SEC indicates a significant step forward for the Sui community and highlights our ongoing commitment to institutional engagement in the blockchain space." Institutional players like Franklin Templeton have already demonstrated interest in SUI products. Regulatory approval could increase SUI investment momentum, potentially impacting related DeFi protocols positively. Nasdaq's filing is closely watched by observers for clues on wider Layer 1 ETF acceptance. The application of similar mechanisms as seen in spot Bitcoin and Ethereum ETFs suggests possibilities for similar investor behavior, enhancing SUI's presence in mainstream finance.

Increased institutional focus on SUI tokens has led to SUI-based products attracting over $300 million in European inflows. This development underscores the growing interest and investment in SUI, further validating its potential as a significant player in the crypto market.