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Journalist
Hassan Shittu
Journalist
Hassan Shittu
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Crypto asset manager 21Shares has taken another step toward launching a spot Polkadot exchange-traded fund (ETF) by submitting an updated S-1 registration statement to the U.S. Securities and Exchange Commission (SEC) on March 6. This follows its initial application filed on Jan. 31.
The update suggests that 21Shares is actively engaging with the SEC, possibly incorporating regulatory feedback or strengthening its case for approval.
If approved, the Polkadot ETF would trade on the Cboe BZX Exchange, with Coinbase as the custodian of the DOT holdings.
This move aligns with broader industry efforts to introduce crypto-based ETFs. On Feb. 25, Grayscale also filed for a spot Polkadot ETF through Nasdaq.
Alongside its Polkadot proposal, 21Shares has recently filed for ETFs tracking Ripple (XRP) and Solana (SOL), adding to its existing Bitcoin (BTC) and Ethereum (ETH) ETF offerings.
The Market Implications of a Polkadot ETF
Introducing a spot Polkadot ETF could have significant implications for institutional and retail investors.
As Polkadot aims to be the leading multi-chain interoperability protocol, increased institutional adoption through an ETF could enhance its market position and long-term viability.
However, despite its technological promise, Polkadot has struggled with price volatility and investor uncertainty.
According to CoinGecko data, DOT has faced a 56.0% decline over the past year and a 2.9% drop in the last month.
21Shares acknowledged this risk in its SEC filing, stating that the ETF’s performance would be directly tied to Polkadot’s market movements.
Bloomberg ETF analyst James Seyffart shared a similar sentiment, emphasizing that the success of such an ETF will depend on investor demand.
“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,” he stated.
Beyond price performance, regulatory uncertainties add another layer of complexity.
The SEC has yet to clarify whether DOT should be classified as a security under U.S. law.
In response, the Web3 Foundation, which oversees Polkadot’s development, has taken proactive steps to ensure DOT remains a decentralized asset and avoids excessive control by any single entity.
These efforts include rejecting investment-only purchases from venture capitalists and focusing on promoting Polkadot’s technology rather than its token value.
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Polkadot 2.0 and SEC’s Shifting Stance
Another crucial factor influencing DOT’s future is the upcoming launch of Polkadot 2.0, a major network upgrade expected in Q1 of this year.
This upgrade aims to enhance the protocol’s scalability and developer accessibility, potentially increasing adoption and driving long-term growth.
An early testnet version is already available on the Kusama network, allowing developers to experiment with its new features.
The SEC’s stance on cryptocurrency ETFs is also evolving, particularly due to regulatory changes and leadership shifts.
The resignation of SEC Chair Gary Gensler on Jan. 20 has paved the way for renewed optimism in the crypto investment sector.
Gensler was known for his cautious approach to digital asset regulations, and his departure has coincided with a surge in ETF filings.
For instance, Osprey Funds and REX Shares recently filed for ETFs tracking meme coins like Dogecoin (DOGE), Official Trump (TRUMP), and Bonk (BONK).
Additionally, the SEC has granted initial approval for Bitwise Asset Management’s Bitcoin and Ethereum ETF, which combines exposure to both BTC and ETH in a single fund.
Meanwhile, 21Shares is also pushing its crypto ETF innovation with its proposal to integrate staking within Ethereum ETF.
The firm recently requested that the SEC allow the staking of Ethereum held by the ETF’s trust.
If approved, this could set a precedent for future ETFs incorporating staking rewards, adding a yield component for investors.
With regulatory dynamics shifting and asset managers doubling down on crypto ETF applications, this represents a key moment in the expanding institutionalization of digital assets.
Whether the SEC grants approval remains uncertain, but the growing momentum behind crypto ETFs indicates that regulated investment vehicles for a wider range of digital assets are becoming increasingly viable.
