Nasdaq has filed a rule change application with the SEC to list and trade shares of 21Shares Polkadot Trust. If approved, it will allow investors to gain exposure to Polkadot without directly holding the cryptocurrency.
Trust structure and key players
According to the SEC filing, 21Shares US LLC will serve as the sponsor for the Polkadot Trust, while CSC Delaware Trust Company will act as the trustee. Coinbase Custody Trust Company will store all Polkadot holdings as the custodian. The trust's net asset value will be calculated daily using the CME CF Polkadot-Dollar Reference Rate – New York Variant.
How shares will be created and redeemed
Shares of the trust will be issued in blocks of 10,000 shares, known as Baskets. Each transaction will involve an Authorized Participant, who will interact with the trust on a cash basis, avoiding direct handling of DOT. All transactions will be processed in cash, with a DOT Counterparty handling purchase and sale of DOT on behalf of the trust.
Regulatory aspects and investment company status
The 21Shares Polkadot Trust is not classified as an investment company under the Investment Company Act of 1940 and does not fall under Commodity Futures Trading Commission (CFTC) regulations.
Nasdaq's application aims to extend opportunities for investors to access Polkadot via a trust. The SEC's decision will be crucial for the future development of cryptocurrency-based funds on traditional exchanges.
