Nasdaq Seeks SEC Approval for 21Shares Polkadot ETF

Nasdaq has submitted a rule change application to the U.S. Securities and Exchange Commission (SEC) to list and trade shares of the 21Shares Polkadot Trust, marking a significant step in the expansion of cryptocurrency offerings on traditional exchanges. This move follows 21Shares' submission of an application to launch a Polkadot Exchange-Traded Fund (ETF) on the NASDAQ exchange, seeking SEC approval through a 19b-4 filing.

The 21Shares Polkadot Trust is designed to provide investors with exposure to Polkadot, a blockchain platform that facilitates the transfer of data and assets across different blockchains. By listing the Polkadot Trust on NASDAQ, investors will gain access to a regulated and transparent investment vehicle that tracks the performance of Polkadot. This development aligns with the broader trend in the financial industry, where traditional exchanges are increasingly embracing cryptocurrencies and blockchain technology.

The filing of the 19b-4 application is a crucial milestone for 21Shares, demonstrating the company's dedication to introducing innovative investment products to the market. The approval of the Polkadot ETF would not only offer investors a new way to gain exposure to Polkadot but also clear the path for other cryptocurrency ETFs to be listed on major exchanges. This could attract more institutional investors to the cryptocurrency market, as ETFs are favored for their ease of use and liquidity.

The SEC's approval process for cryptocurrency ETFs has historically been slow and challenging due to regulatory hurdles. However, the filing of the 19b-4 application by NASDAQ and 21Shares indicates a growing acceptance of cryptocurrencies by traditional financial institutions. The SEC will now review the application to determine if it meets the necessary regulatory requirements for listing and trading on a national securities exchange. If approved, the 21Shares Polkadot ETF would be one of the first cryptocurrency ETFs listed on a major U.S. exchange, providing investors with a new avenue to access the rapidly growing cryptocurrency market.

This move signals growing institutional interest in Polkadot and the broader digital asset investment space. The ETF, if approved, would track the spot price of DOT, Polkadot’s native token. The fund will be managed by 21Shares US LLC, with Coinbase Custody securing the underlying DOT tokens. Similar to the 21Shares Bitcoin and Ethereum ETFs, this fund will use the CME CF Polkadot Index as its benchmark.

Grayscale Investments is also exploring the launch of a spot Polkadot ETF, further highlighting the strong institutional interest in this asset class. The SEC’s decision on these proposals will be closely watched. Additionally, 21Shares is looking to expand its ETF offerings, seeking regulatory approval for similar ETFs based on XRP and Solana (SOL). This strategic expansion underscores 21Shares’ ambition to become a leading provider of diverse digital asset investment products.

The potential listing of a Polkadot ETF could be a turning point for the blockchain project. Polkadot is a unique blockchain that connects “parachains” to enable interoperability with different blockchains. The founder of Polkadot, Rob Habermeier, emphasizes the project's focus on interoperability and security. An ETF would make DOT more accessible to a wider range of investors, including those hesitant about direct purchase and custody of cryptocurrencies. The additional trading activity could increase overall price discovery, potentially decreasing volatility and creating a more stable market for DOT.

The SEC has repeatedly postponed or denied several cryptocurrency-related ETF proposals, often citing concerns about market manipulation and investor protection. The agency’s approach to these matters will be crucial in shaping the future of both 21Shares’ Polkadot ETF application and the digital asset investment space in general.