Nasdaq has officially submitted a filing with the U.S. Securities and Exchange Commission (SEC) to list an exchange-traded fund (ETF) for Polkadot (DOT). This ETF will be managed by the asset management firm 21Shares, known for its expertise in offering crypto-based investment products. The filing, made under Form 19b-4, marks a significant step for Polkadot and the cryptocurrency market, as it moves closer to becoming more widely accessible to investors through regulated financial instruments.

The 21Shares Polkadot Trust is designed to track the performance of Polkadot’s native token, DOT. This filing follows an earlier registration statement that 21Shares filed with the SEC in January to create the Polkadot Trust. Initially, 21Shares planned to list the Trust on the Cboe BZX Exchange, but Nasdaq is now taking the lead in the effort, filing an updated application to list shares of the Trust on its platform. This shift underscores Nasdaq’s interest in capitalizing on the growing demand for cryptocurrency-based investment vehicles.

Key Details of the Polkadot ETF

The Polkadot ETF will be managed by 21Shares US LLC, and the Trust will hold Polkadot (DOT) tokens in custody with Coinbase. The Trust will track the performance of DOT through the CME CF Polkadot-Dollar Reference Rate—New York Variant, which is calculated by CF Benchmarks Ltd. This means that the ETF will offer investors exposure to Polkadot’s price movements, much like how traditional ETFs track the performance of specific stocks or commodities.

One of the defining features of the 21Shares Polkadot Trust is that it will not engage in speculative trading or leverage. Instead, it will exclusively hold DOT tokens. The Trust’s operation will involve selling DOT tokens when shares are redeemed, and using the proceeds to settle the transaction in cash. This ensures that the ETF remains straightforward and focused on tracking Polkadot’s price.

Additionally, the Trust will operate on a block-based mechanism, where DOT tokens will be transferred in or out of the trust in exchange for blocks of 10,000 shares. Authorized financial firms will provide cash to buy shares, which will then be used by the Trust to acquire DOT tokens through third-party transactions. This operational structure provides a transparent and efficient method for managing the ETF and ensures liquidity for investors.

Steps Toward Approval

The filing of Form 19b-4 marks an important milestone in the approval process for the Polkadot ETF. After Nasdaq submits the form, the SEC has 240 days to review the filing and make a decision. The SEC’s approval process will involve carefully considering the regulatory implications of listing a cryptocurrency ETF, assessing market conditions, and ensuring the financial stability of the Trust. If the SEC approves the filing, the Polkadot ETF could be listed on Nasdaq, allowing investors to buy and sell shares linked to Polkadot’s performance.

It’s worth noting that 21Shares is not the only asset manager aiming to introduce a Polkadot-based ETF. Grayscale, another prominent asset manager, has also submitted an application to introduce its own Polkadot ETF, signaling the growing interest in cryptocurrency-based ETFs among traditional investment firms.

Impact on Polkadot (DOT) and the Market

At the time of the filing, DOT was trading at around $6.71 billion in market capitalization, making it the 21st largest cryptocurrency by market value. While the news of the Nasdaq filing did not have an immediate significant impact on DOT’s price, the potential approval of the ETF could lead to increased demand for the token. If the ETF is approved, it may encourage institutional and retail investors to gain exposure to Polkadot through a more traditional investment vehicle, which could drive up the price of DOT in the future.

In conclusion, the filing by Nasdaq with the SEC to list the 21Shares Polkadot ETF represents a major development in the world of cryptocurrency ETFs. It signals increasing acceptance of crypto assets in traditional financial markets, with Polkadot positioned as a key player in this emerging investment space. Investors and market observers will closely monitor the SEC’s decision in the coming months, as it could set the stage for further innovation in the crypto ETF space.