On 7 March 2025, the United States Securities and Exchange Commission (US SEC) released a notice regarding the Nasdaq Stock Market LLC’s proposal to list and trade shares of the Grayscale Polkadot Trust (DOT) under Nasdaq Rule 5711(d). The proposal, filed on 24 February 2025, outlines regulatory considerations for listing the trust, which will hold Polkadot (DOT) tokens. The US SEC has invited public comments on the proposed rule change. The Nasdaq proposal identifies Grayscale Operating, LLC and Grayscale Investments Sponsors, LLC as the sponsors of the trust, with CSC Delaware Trust Company as the trustee, Coinbase Custody Trust Company, LLC as the custodian, and BNY Mellon Asset Servicing as the administrator and transfer agent.
On 24 February 2025, The Nasdaq Stock Market LLC submitted a proposed rule change to the US Securities and Exchange Commission (SEC) under Section 19(b)(1) of the United States Securities Exchange Act of 1934 (15 U.S.C. 78s(b)(1)), and US SEC Rule 19b-4 (17 CFR 240.19b-4). Nasdaq’s filing outlines the purpose of the proposed rule change, stating that the Grayscale Polkadot Trust (the “Trust”) is designed to provide investors with indirect exposure to Polkadot (DOT), the native token of the Polkadot blockchain network, without requiring them to hold the asset directly. The Trust operates as a passive investment vehicle, meaning that it will not engage in any active trading or hedging strategies.
The stated purpose of the proposed rule change is to facilitate investor access to DOT through a regulated exchange-traded product. The proposal argues that the listing aligns with United States Securities Exchange Act of 1934, Section 6(b)(5), which mandates that exchange rules prevent fraudulent practices and protect investor interests. Nasdaq asserts that the trust’s market surveillance measures, liquidity provisions, and transparency standards meet the requirements necessary for listing approval. The exchange further cites precedents from approved exchange-traded products (ETPs) tied to Bitcoin and Ethereum. According to Nasdaq’s filing, each share of the Trust represents a fractional, undivided beneficial interest in the Trust’s DOT holdings. The Trust will issue shares in “Baskets” of 10,000 shares, allowing only Authorised Participants (APs) to create or redeem shares directly. Investors will be able to buy and sell shares on the secondary market, with pricing determined by the net asset value (NAV) of the Trust’s DOT holdings.
The Trust will be sponsored by Grayscale Investment Sponsors, LLC, an indirect wholly owned subsidiary of Digital Currency Group, Inc. (DCG). It will also involve key institutional partners: Coinbase Custody Trust Company, LLC as the custodian, BNY Mellon Asset Servicing as the administrator and transfer agent, and Foreside Fund Services, LLC as the marketing agent.
Nasdaq argues that the proposed listing is consistent with SEC requirements under the Exchange Act, particularly with reference to Section 6(b)(5) (15 U.S.C. 78f(b)(5)), which mandates that exchanges prevent fraudulent practices and protect investors, Section 12(f) (15 U.S.C. 78l(f)), which governs the extension of unlisted trading privileges for securities and US SEC rule 19b-4 (17 CFR 240.19b-4), which sets the procedural framework for self-regulatory organisations (SROs) like Nasdaq to propose rule changes. For the Grayscale Polkadot Trust, Nasdaq has argued that its proposed structure incorporates sufficient safeguards against manipulation, including reliance on the CoinDesk DOT Reference Rate and Coinbase Custody’s cold storage solutions to ensure asset security.
The US SEC has published this notice to solicit public comments on the proposed rule change before determining whether it aligns with regulatory requirements, including investor protection and market integrity. The agency’s evaluation will be guided by its mandate under Section 6(b)(5) of the United States Securities Exchange Act of 1934 (15 U.S.C. 78f(b)(5)), which requires that national securities exchanges be structured to prevent fraudulent and manipulative acts and practices, promote fair trading, and protect investors and the public interest. The US SEC, under Section 19(b)(2) of the Exchange Act (15 U.S.C. 78s(b)(2)), is expected to review the proposal within 45 days of its publication in the Federal Register and may extend this period up to 90 days if further assessment is required. The decision will determine whether the Grayscale Polkadot Trust gains approval for listing on Nasdaq.
If approved, the Grayscale Polkadot Trust would become one of the first publicly traded investment products offering direct exposure to Polkadot (DOT), potentially setting a precedent for future digital asset listings on US-regulated exchanges.
(Source: https://www.sec.gov/files/rules/sro/nasdaq/2025/34-102539.pdf)
