Nasdaq moves to list 21Shares’ Polkadot Trust, files rule change with SEC

Nasdaq filed a rule change application with the U.S. Securities and Exchange Commission (SEC) to list and trade shares of 21Shares Polkadot Trust on Tuesday.

If the SEC approves it, the trust will allow investors to gain exposure to Polkadot (DOT) without directly holding or managing the cryptocurrency. The proposal falls under Nasdaq Rule 5711(d), which governs the listing of commodity-based trust shares.

The filing, submitted under Section 19(b)(1) of the Securities Exchange Act of 1934, details Nasdaq’s request to classify these shares as commodity-based securities. “The trust’s objective is to track the price of DOT without actively managing or speculating on it,” Nasdaq said in the filing.

Trust structure and key players

According to the SEC filing, 21Shares US LLC will serve as the Polkadot Trust’s sponsor, while the CSC Delaware Trust Company will act as the trustee, and a third-party administrator will handle operational processes.

All Polkadot holdings will be stored by Coinbase Custody Trust Company, which will serve as the custodian. The trust will calculate its net asset value (NAV) daily at 4:00 p.m. ET, using the CME CF Polkadot-Dollar Reference Rate – New York Variant as its benchmark. This rate, calculated by CF Benchmarks Ltd., aggregates executed trade data from multiple crypto exchanges to determine DOT’s market price in U.S. dollars.

The trust will not use leverage, derivatives, or yield-generating activities. “The trust will not participate in staking, lending, or any action where DOT is used to earn additional returns,” the filing said. It will also reject any airdropped or forked tokens.

How shares will be created and redeemed

Shares of the trust will be issued in blocks of 10,000 shares, known as Baskets, and each transaction will involve an Authorized Participant, which can be any financial institution approved to interact directly with the trust. Unlike other crypto investment products, these participants will not handle DOT directly. Instead, all share creations and redemptions will be processed in cash.

“When an Authorized Participant wants to create shares, they will deposit U.S. dollars into the trust’s account,” Nasdaq’s filing explains. “A designated third party, referred to as the DOT Counterparty, will then use that cash to purchase an equivalent amount of Polkadot, which will be deposited into the trust’s custody account.”

When shares are redeemed, the process is reversed. The DOT Counterparty will sell an equivalent amount of Polkadot, convert it to U.S. dollars, and deposit the proceeds into the trust’s account for settlement. “Authorized Participants will receive cash, not DOT,” the document said.

The DOT Counterparty will be a separate entity from the Authorized Participants. It will buy and sell DOT on behalf of the trust but will not be acting as an agent of the Authorized Participant. The Sponsor will select the DOT Counterparty based on factors such as financial stability, settlement history, and regulatory oversight. “The DOT Counterparty is not obligated to accept all creation or redemption orders,” the filing clarifies.

Nasdaq confirms that the 21Shares Polkadot Trust is not an investment company under the Investment Company Act of 1940. Polkadot (DOT) is also not a commodity pool, meaning it will not be subject to Commodity Futures Trading Commission (CFTC) regulations, according to the SEC filing on Tuesday.

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