21Shares files for SEI ETF, partnering with Coinbase Custody; aims to track SEI token performance and explore staking rewards.
In a significant move, 21Shares filed an S-1 registration with the U.S. Securities and Exchange Commission (SEC). The filing is for the 21Shares Sei ETF, a new exchange-traded fund. This ETF aims to track the price of the SEI token. Additionally, it may acquire staking rewards where permitted. Coinbase Custody will store the SEI tokens on behalf of the ETF to make it secure.
21Shares SEI ETF to Operate as Grantor Trust, Not Investment Company
The filing gives clear information regarding the structure of the ETF. The trust will portray the performance of SEI minus fees and liabilities. Moreover, 21Shares can invest in SEI tokens in case legal and tax regulations allow. In the event of staking, it will be external providers or liquid staking tokens. But the stake as yet has not been decided upon.
Related Reading: Canary Capital Files for SEI Staking ETF with SEC | Live Bitcoin News
Notably, 21Shares Sei ETF will not be an investment company under the Investment Company Act 1940. Consequently, the investors will fail to enjoy the protection that is provided by the conventional registered investment firms. Rather, the ETF will be a grantor trust. This implies that it will exclusively engage in the exposure of the SEI token.
On top of that, Coinbase Custody has a role described in the filing. Coinbase will serve as the custodian to all SEI tokens that support the ETF shares. It will also be in charge of the redemption and creation process. Authorized parties may subscribe to, or redeem in cash or in-kind, in shares. This makes the functioning of the ETF smooth.
The 21Shares filing is a wider trend. The altcoin ETFs are currently being sought by a few firms. Solana ETFs have been applied to by, e.g. VanEck, Bitwise, and Grayscale. Other companies are investigating ETFs based on XRP, Cardano, Dogecoin, HBAR and Litecoin. It is an indication of increased interest in cryptocurrency investment products.
Canary Capital, Cboe Join SEI ETF Filing Wave
In addition, 21Shares is not the first to target SEI. Canary Capital has just filed an S-1 of a SEI ETF. Soon thereafter Cboe filed a 19b-4 filing in a staked SEI ETF version. As a result, 21Shares is in a competitive competition to introduce a SEI based product.
Coinbase Custody is an important choice. Coinbase is a reputable brand in crypto. Its position ensures that the SEI tokens are safely kept. In addition, it assists the ETF in the conduct of its operations by managing the flows of tokens of authorized participants.
However, investors must take care. This is because the ETF is a grantor trust, which does not offer any regulatory safeguard. In addition, staking rewards are not assured. Staking may be limited by legal and tax matters. Hence, the risks should be examined by the potential investors.
In conclusion, 21Shares’ filing marks an exciting step for SEI investors. The Cooperation with Coinbase Custody brings credibility. However, the success of the ETF will be informed by the approval of the regulations and the market conditions. With the increase in the crypto ETF market, 21Shares is setting itself to compete. This and other altcoin ETF filings will be under scrutiny by the SEC, which investors will be following.
