The crypto asset manager 21Shares moved ahead with its plan to introduce a Polkadot spot ETF on March 6 by sending its new S-1 registration statement to the SEC for review. The firm showed its active commitment to SEC engagement when it put in its first application on January 31. 

The revised document suggests that the company applied regulatory input in preparation for obtaining product approval. The Polkadot ETF would become available for trading on the Cboe BZX Exchange while Coinbase Safeguarding the fund money. 

The industry keeps bringing crypto-based ETFs to normal investors as part of its overall strategy. A week before 21Shares submitted its Polkadot ETF application the SEC saw Grayscale apply for a spot ETF showing this field is getting intense competition.

SEC Regulatory Uncertainty Hinders Polkadot ETF Approval

As 21Shares continues to develop its cryptocurrency lineup it added ETF filing requests for investment products linked to Ripple (XRP) and Solana (SOL) besides its Bitcoin (BTC) and Ethereum (ETH) funds.  

The launch of a successful Polkadot ETF would benefit both professional traders and retail investors. The launch of Polkadot’s ETF will improve connections between multiple blockchain systems which will help grow its market standing and future success.

Polkadot encounters several major obstacles on its development path. The cryptocurrency experiences substantial market fluctuations because its value decreased by 56% in one year and 2.9% within the last month as CoinGecko shows. 21Shares admits these issues in its SEC filing by connecting Polkadot’s ETF performance directly to token market changes.

In a Bloomberg interview Bloomberg ETF analyst James Seyffart explained that the success of a Polkadot ETF requires investors to be interested in the product. Market forces will determine if introducing the product has value and determines market value. He noted that if individuals do not invest in the Polkadot ETF then the product would cease to exist.

idk who needs to hear this but 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

— James Seyffart (@JSeyff) January 31, 2025

Several issues pile up making the situation confusing for investors and businesses alike. Despite market interest in crypto ETFs the SEC has not defined if DOT should be labeled a securities asset under US legal standards. 

This makes regulatory unknowns a significant obstacle for Polkadot ETF development. The Web3 Foundation responsible for Polkadot development created measures to keep DOT tokens free from centralization and control of multiple entities. The platform blocks venture capitalist investment while working hard to develop the core Polkadot networks.

A significant part of Polkadot’s development depends on the network upgrade to Polkadot 2.0 which the crypto sector anticipates launching during the first quarter of 2019. The new Polkadot 

21Shares Seeks SEC Approval to Add Ethereum Staking Rewards

2.0 version will make development easier and let more people join, which should attract more users and drive sustained growth. The new upgrade features from Polkadot 2.0 are now being tested on Kusama’s network for developers to explore through early release versions.

The SEC now has different leaders who affect its decisions about cryptocurrency ETFs along with recent administrative shifts in authority. After SEC Chair Gary Gensler left on January 20 there is growing belief among regulators that digital assets might receive more supportive policies. 

Wow. That was fast. @REXShares and Osprey have filed for a bunch of crypto ETFs including memecoins TRUMP, BONK, and DOGE.

Also includes ETFs for Bitcoin, Ether, Solana, and XRP. pic.twitter.com/A4FzTdaBOj

— James Seyffart (@JSeyff) January 21, 2025

The crypto investment sector gained fresh optimism after the resignation of Gary Gensler because his SEC led with conservative crypto regulation measures. The change in regulatory sentiment shows up as more crypto ETF applications came to the SEC for filing. 

Osprey Funds and REX Shares want to release ETFs that follow meme coin investments involving Dogecoin (DOGE), Bonk (BONK), and the Official Trump coin (TRUMP).  The SEC granted its first approval to Bitwise Asset Management for launching an ETF combining BTC and ETH exposure.

21Shares wants the SEC to accept its application to add staking rewards into an Ethereum ETF for its users. The company works with the SEC to allow Ethereum staking in their ETF trust to create a new standard for crypto ETFs that integrate revenue creation features.

This time marks a significant phase as investment firms work harder to create crypto ETFs and bring digital assets into institutional markets. Whether 21Shares can launch a Polkadot ETF depends on both government approval for this type of fund and how much investor interest exists in crypto investments. 

Crypto ETFs are gaining strength which shows they can become widely accepted funds for various digital assets as they enter traditional stock markets.