- As per the data from CoinMarketCap, Polkadot is the 18th biggest crypto by market capitalization, but the price performance has been disappointing in recent times.
- On January 31, Seffart posted on X mentioning that the market will decide the value and if there is value in introducing such a product
- The filing of 21 Shares came after the resignation of SEC chair Gary Gensler on January 20.
21Shares, an asset management company, has filed with the Securities and Exchange Commission of the United States to introduce a spot Polkadot exchange-traded fund (ETF).
The January 31 SEC filing mentions the statement of 21Shares that intends to list the 21 Shares Polkadot Trust on the Cboe BZX exchange, with crypto exchange Coinbase behaving as the DOT custodian.
The move was taken after four years when 21Shares introduced a similar product in Switzerland. In February 2021, the asset manager introduced the first Polkadot ETP on the Swiss SIX exchange around the world.
No guarantee of the price performance
As per the data from CoinMarketCap, Polkadot is the 18th biggest crypto by market capitalization, but the price performance has been disappointing in recent times. Over the last year, the price has slumped 5.16%, and it is low by 10.48% over the past month.
The filing alerted that there is no guarantee of the price performance of Polkadot, whether it is short-term or long-term after the ETF gets introduced. Although, there is no guarantee that DOT will continue to balance its value in the long or intermediate term, as per the filing.
In the incident, where the price of DOT goes down, the sponsor anticipates the value of the Shares to go down optimally. An ETF analyst from Bloomberg, James Seyffart mentioned that, in the end, the market will go down if there is a need and demand for a spot Polkadot ETF.
On January 31, Seffart posted on X mentioning that the market will decide the value and if there is value in introducing such a product. If no one invests in a Polkadot ETF, it will close. People are not restricted from introducing whatever ETFs are considered to be permitted by the SEC.
The filing highlighted the potential risks linked with the Polkadot Network. These consisted of a probable increase in the DOT supply accessible for trading and the probability of DOT being grouped as a security under federal laws.
Chair’s exit ignited a wave of crypto filing
The Web3 Foundation, which backs the Polkadot protocol, contended against DOT being a security in February 2023, mentioning that it had taken steps to control the distribution of the DOT token so that no one holds a big percentage of the network.
It also mentioned that it refused purchases from venture capitalists interested only in investment purposes and aimed more at promoting the technology of Polkadot over the token itself. The filing of 21 Shares came after the resignation of SEC chair Gary Gensler on January 20.
The exit of the Chair ignited a wave of crypto ETF filings both before and after the resignation. Just a day after Gensler resigned, the asset managers Osprey Funds and REX filed to introduce ETFs for memecoins, consisting of Dogecoin Official Trump and Bonk.
