šµļø Why the SEC hasn't approved a DOT ETF yet
1. Regulatory review and timeline
Grayscale and other firms (e.g., 21Shares) filed DOT ETF applications around February 2025. The SEC initially had until AprilāÆ27 to decide but routinely extended the review, pushing deadlines to JuneāÆ11 then even into September 2025 .
These extensions are standard practice, allowing the SEC time to gather public feedback, request clarifications, and deliberate carefully .
2. Complexity & novelty
Unlike Bitcoin or Ethereum, Polkadot is an altcoin with unique featuresāproof-of-stake consensus, parachains, ecosystem governanceāthat raise technical and legal complexities the SEC wants to thoroughly understand .
The SEC also needs clarity on whether DOT is a commodity or security, which impacts its approval authority .
3. Market surveillance & manipulation risks
A key part of ETF approval is demonstrating robust surveillance of underlying markets to guard against price manipulation. The SEC likely sees the Polkadot market as less mature and more vulnerable compared to BTC or ETH .
4. Custody & investor protection
Secure custody solutions for digital assets are critical. The SEC must ensure that providers can store DOT safelyādemonstrating protection from hacks and losses .
Volatility and investor risk are also major concerns: DOT has seen notable price swings and may present a greater risk for retail investors .
5. Altcoin precedent
While BTC and ETH spot ETFs have been approved, altcoin ETFs are a newer frontier. The SEC appears to be taking a case-by-case approach, and hasn't yet signaled broad acceptance of altcoin ETFs .
Approval of a DOT ETF could establish a major precedentāso the SEC wants to tread carefully .
š£ļø Whatās next?
The SEC has already used at least two extensions (to June 11 and beyond). They can do this up to four times, pushing any final decision potentially into lateāÆ2025 or earlyāÆ2026 .
Regulators continue to engage with applicants, requesting clarification and improvementsāe.g., 21Shares has already provided updated info on custody via Coinbase and exchange measures .
šÆ In summary
A DOT ETF hasnāt been "rejected"āit's simply still under review. The SEC is taking a careful, methodical approach due to:
Technical and legal complexities specific to Polkadot,
Market surveillance and liquidity concerns,
Custody and investor protection issues,
The broader implications of approving the first altcoin ETF.
Expect developments later in 2025 or early 2026. Whether it ultimately gets approved will depend on the SEC's confidence in these areas.