21Shares, a company specializing in digital asset management, has taken another step towards the launch of a ETF on Polkadot (DOT).
On March 6, the company submitted an update to the registration request S-1 to the United States Securities and Exchange Commission (SEC), initially filed on January 31.
This update indicates that 21Shares is actively collaborating with the SEC, potentially to respond to requests for clarification or to improve the dossier in view of approval.
If accepted, the ETF on Polkadot will be listed on the Cboe BZX Exchange, with Coinbase as the custodian of the DOT reserves.
21Shares: the context of cryptocurrency ETFs and the role of Polkadot
“`html
The application by 21Shares is part of a broader trend in the financial sector towards physically-backed cryptocurrency ETFs. On February 25, Grayscale also submitted a request for a Polkadot ETF, proposing its listing on Nasdaq.
“`
In addition to Polkadot, 21Shares has recently submitted applications for ETFs based on Ripple (XRP) and Solana (SOL), which would complement the offerings already available on Bitcoin (BTC) and Ethereum (ETH).
The introduction of an ETF directly linked to Polkadot could significantly impact the market.
The objective of the Polkadot project is to become the leading multi-chain interoperability network, allowing blockchains to communicate with each other efficiently.
An increase in institutional adoption resulting from the ETF could favor Polkadot’s position in the market and enhance its long-term stability. However, the project has faced strong price fluctuations and uncertainties among investors.
According to the data from CoinGecko, DOT has recorded a decline of 56% in the last year and a reduction of 2.9% in the last month.
This makes the product more exposed to volatility risks. In the document submitted to the SEC, 21Shares acknowledged that the ETF’s performance will directly follow the market movements of Polkadot.
The analyst from Bloomberg ETF, James Seyffart, emphasized that the success of an ETF on Polkadot will primarily depend on investor demand. “If no one invests in the fund, it will close,” he explained.
Regulation and uncertainties on the status of DOT
In addition to market dynamics, regulatory uncertainties represent another critical element. The SEC has not yet clarified whether DOT should be considered a financial security under U.S. legislation.
To avoid overly strict regulation, the Web3 Foundation, which oversees the development of Polkadot, has implemented some preventive measures. Among these:
- – Exclusion of purely speculative investments by venture capital
- – Greater emphasis on the technology and the Polkadot ecosystem rather than on the value of the token
These measures aim to strengthen the decentralized nature of DOT, reducing the risk of control by a single entity or group.
An additional key factor for the future of Polkadot is the release of Polkadot 2.0, scheduled for the first quarter of 2024.
This new version introduces improvements to scalability and accessibility for developers, with the aim of encouraging greater adoption of the network.
Currently, an initial testnet is active on Kusama, allowing programmers to test innovations before the official launch.
In the meantime, regulatory developments could influence the approval of ETFs on criptovalute. On January 20, SEC Chairman Gary Gensler resigned, paving the way for a possible shift in the digital investment sector.
Gensler was known for his cautious stance towards digital assets, and his departure coincided with a wave of new ETF requests.
For example, companies like Osprey Funds and REX Shares have recently submitted proposals for ETFs on emerging cryptocurrencies such as Dogecoin (DOGE), Official Trump (TRUMP), and Bonk (BONK).
New strategies for ETFs: staking and market expansion
Another innovation in the sector comes again from 21Shares, which has proposed the integration of staking within an ETF on Ethereum.
The company has asked the SEC to authorize the staking of the ETH held by the fund, allowing investors to earn rewards passively.
If this strategy were approved, it could pave the way for cryptocurrency ETFs that incorporate yield mechanisms, increasing the attractiveness of these financial products.
In parallel, the SEC has granted an initial approval to innovative ETFs like that of Bitwise Asset Management, which combines exposure to Bitcoin and Ethereum in a single fund.
This approach confirms a growing interest in the regulation of financial instruments based on digital assets.
The demand for crypto ETFs is growing, and financial institutions are expanding their offerings to include a wider variety of digital assets.
However, the regulatory path remains partly uncertain, and the success of these instruments will depend on the response of investors and the decisions of the SEC.
The update of the request for the ETF on Polkadot marks an important step in this process.
If approved, it could represent a turning point for the institutional adoption of DOT and confirm the financial sector’s interest in a greater integration between traditional markets and cryptocurrencies.
