Asset management firm 21Shares has filed with the US Securities and Exchange Commission (SEC) to launch a spot Polkadot exchange-traded fund (ETF).
In a Jan. 31 SEC filing, 21Shares stated its intention to list the 21Shares Polkadot (DOT) Trust on the Cboe BZX exchange, with cryptocurrency exchange Coinbase acting as the DOT custodian.
It comes just four years after 21Shares launched a similar product in Switzerland. In Feb 2021, the asset manager launched the world’s first Polkadot ETP on the Swiss SIX exchange.
The market ‘will decide’ if there is value for Polkadot ETF
Polkadot is the 18th largest crypto by market capitalization, but its price performance has been underwhelming in recent times. Over the past 12 months, its price has fallen 5.16%, and it’s down 10.48% in the last month, according to CoinMarketCap data.
Polkadot is trading at $6.42 at the time of publication. Source: CoinMarketCap
The filing warned that there’s no guarantee of Polkadot’s price performance, either in the short or long term, after the ETF launches.
“There is no assurance that DOT will maintain its value in the long or intermediate term,” the filing said.
“In the event that the price of DOT declines, the Sponsor expects the value of the Shares to decline proportionately.”
Bloomberg ETF analyst James Seyffart said, in the end, the market will decide if there’s demand for a spot Polkadot ETF.
“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. People are free to launch whatever ETFs are deemed to be allowed by the SEC,” Seyffart said in a Jan. 31 X post.
The filing outlined potential risks associated with the Polkadot Network. These included a potential increase in the DOT supply available for trading, and the possibility of DOT being classified as a security “under federal laws.”
Polkadot security concerns shut down
The Web3 Foundation, which supports the Polkadot protocol, argued against DOT being a security in February 2023, stating that it had taken steps to manage the distribution of the DOT token so that no individual holds a large percentage of the network.
It also said it turned down purchases from venture capitalists interested solely in investment purposes, and focused more on promoting Polkadot’s technology over the token itself.
Related: US Bitcoin ETFs’ first anniversary: A surge far above expectations
21Shares’ filing follows the resignation of crypto skeptic Gary Gensler as SEC chair on Jan. 20. Gensler’s departure triggered a wave of crypto ETF filings both before and after the resignation date.
A day after Gensler’s resignation, asset managers Osprey Funds and REX Shares filed to launch ETFs for memecoins, including Dogecoin (DOGE), Official Trump (TRUMP), and Bonk (BONK), according to a Jan. 21 filing.
Meanwhile, more recently, the SEC gave initial approval to Bitwise Asset Management’s ETF, the “Bitwise Bitcoin and Ethereum ETF,” which would track the price of Bitcoin (BTC) and Ethereum (ETH) in a single fund.
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