SEC Reviews Nasdaq’s Polkadot Trust Listing for Compliance

The U.S. Securities and Exchange Commission (SEC) has initiated a formal review of Nasdaq’s application to list the 21Shares Polkadot Trust. This move is a significant step in the expansion of regulated crypto investment products. The proposal, submitted in March 2025, aims to introduce a Polkadot (DOT)-backed trust under Nasdaq Rule 5711(d), which could broaden investor access to altcoin exposure within a regulated framework.

The SEC’s scrutiny focuses on compliance with Section 6(b)(5) of the Securities Exchange Act, which emphasizes investor protection and fraud prevention. The trust, sponsored by 21Shares US LLC, is designed to track the performance of DOT through the CME CF Polkadot-Dollar Reference Rate. The digital assets are securely held by Coinbase Custody, ensuring institutional-grade asset protection. Shares of the trust would be issued or redeemed in blocks of 10,000, with settlements conducted entirely in cash, aligning with established practices for commodity trusts.

The SEC’s review centers on whether the listing proposal complies with Section 6(b)(5) of the Securities Exchange Act, which mandates that exchanges prevent fraudulent and manipulative acts and protect investors and the public interest. The commission’s request for public comments highlights its commitment to transparency and stakeholder engagement in the regulatory process. Interested parties, including investors, legal experts, and industry participants, have a 21-day window to submit comments, with an additional 35 days allowed for rebuttals following publication in the Federal Register.

This open comment period is a critical phase, as it allows the SEC to gather diverse perspectives on the potential risks and benefits of listing a Polkadot-backed trust. The outcome will likely set a precedent for future altcoin-based exchange-traded products (ETPs), especially as issuers seek to diversify beyond Bitcoin and Ethereum.

The SEC’s decision on Nasdaq’s proposal will be a pivotal benchmark for the crypto investment landscape. For 21Shares and other issuers, gaining approval to list altcoin trusts on major exchanges represents a strategic opportunity to attract institutional and retail investors seeking regulated exposure to emerging digital assets. The involvement of Coinbase Custody as the custodian adds a layer of credibility and security, which may influence regulatory confidence.

With Paul Atkins at the helm as the new SEC chairman, the crypto community is optimistic about a more balanced regulatory approach that fosters innovation while maintaining robust investor safeguards. This development aligns with broader legislative efforts, such as the recent U.S. Senate crypto bill that challenges the SEC’s jurisdiction in favor of the Commodity Futures Trading Commission (CFTC), signaling evolving regulatory dynamics.

The SEC’s solicitation of public input is a strategic move to ensure comprehensive evaluation of the listing proposal. Stakeholders are encouraged to participate actively by submitting detailed comments and analyses. This participatory process not only enhances regulatory transparency but also provides the SEC with valuable insights into market sentiment and potential operational challenges.

Following the comment period, the SEC will analyze the feedback before making a final determination. The timeline and outcome remain uncertain, but the process exemplifies the regulatory rigor applied to new crypto investment products, reinforcing the importance of compliance and investor protection in this rapidly evolving sector.

The SEC’s review of Nasdaq’s bid to list the 21Shares Polkadot Trust represents a critical juncture for altcoin-based investment products in the United States. By emphasizing compliance with fraud prevention and investor protection standards, the commission is setting a cautious yet constructive tone for the integration of innovative crypto assets into regulated markets. Stakeholders should monitor the public comment process closely and prepare for potential shifts in the regulatory landscape that could influence the future of crypto ETFs and trusts.