21Shares Prepares for SEI Token ETF with SEC Application

Crypto asset manager 21Shares has filed an application with the U.S. Securities and Exchange Commission (SEC) to launch an exchange-traded fund (ETF) tied to the SEI token. 

Structure and Benchmarking

According to the S-1 registration filed on Thursday, the ETF will track SEI’s market value using the CF SEI-Dollar Reference Rate, developed by CF Benchmarks. The benchmark aggregates pricing data from multiple cryptocurrency exchanges, ensuring standardized valuation. Shares of the fund will be priced daily based on this index.

The ETF is designed as a passive vehicle, meaning it will reflect SEI’s spot price without employing leverage, derivatives, or speculative trading strategies. Coinbase Custody Trust Company has been appointed to safeguard the fund’s SEI holdings.

About the SEI Network

SEI is the native asset of the Sei Network, a Layer-1 blockchain launched in August 2023. The network specializes in high-performance trading infrastructure for decentralized exchanges and marketplaces. The token serves multiple roles, including gas fee payments and governance participation, while also being considered for staking rewards.

Staking and Custody Considerations

21Shares stated in the filing that the fund may eventually stake SEI to enhance returns. However, it emphasized that such a step would only be taken after evaluating potential regulatory, legal, and tax risks. While staking remains under review, the firm has not ruled out exploring liquid staking options in the future if deemed compliant.

All SEI transactions related to fund operations will be handled by vetted third-party counterparties. These entities must meet standards of financial strength, regulatory oversight, and settlement reliability.

Subscription and Redemption Mechanisms

Authorized Participants will be able to subscribe or redeem shares either through cash or in-kind transfers. For cash transactions, a designated counterparty will convert U.S. dollars into SEI before depositing them with Coinbase Custody. In in-kind transactions, SEI tokens will be delivered directly to the Trust, which will then issue corresponding shares after deducting fees.

Redemptions will return SEI or its cash equivalent, depending on the arrangement. This dual-structure approach allows flexibility while maintaining regulatory safeguards.

Seed Capital and Market Launch

The filing also revealed that the Sponsor has seeded the ETF with an initial purchase of two shares priced at $50 each. An affiliate of the Sponsor is expected to acquire additional seed baskets following SEC approval. Once cleared, the ETF aims to list under a yet-to-be-determined ticker symbol.

While the SEI ETF will not fall under the Investment Company Act or CFTC jurisdiction, it will operate within SEC regulatory parameters. The offering, unless extended, will remain open for up to three years. Investors trading on secondary markets will incur standard brokerage fees.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice