21Shares files with SEC for SEI ETF featuring potential staking option

21Shares has filed an S-1 registration statement with the SEC for an SEI exchange-traded fund (ETF), aiming to expand its range of cryptocurrency investment products. The proposed fund, named 21Shares SEI ETF, will provide investors with exposure to SEI, the native token of the Sei Network.

Once launched, the 21Shares SEI ETF will track the CF SEI-Dollar Reference Rate in USD. The fund may also consider staking some of its SEI holdings to earn rewards, although 21Shares has not confirmed whether this will take place. The company commented on its filing via X, calling it a “key milestone in our vision to expand exchange-traded access to the SEI Network.”

Coinbase Custody Trust Company will safeguard assets for the 21Shares ETF

The Sei Network operates as a Layer 1 blockchain designed for high-speed trading and decentralized exchange applications. SEI, its token, is used for transaction fees, governance, and staking. According to the SEC, the SEI ETF is intended as a passive investment vehicle that mirrors SEI’s price performance and will not utilize leverage, derivatives, or speculative strategies.

21Shares filed the S-1 registration on August 28. The ETF’s valuation will rely on the CF SEI-Dollar Reference Rate, calculated by CF Benchmarks Ltd., which aggregates trading data from multiple platforms. Daily share pricing will be based on this rate, with Coinbase Custody holding the SEI tokens for the fund.

Staking SEI to generate additional returns remains under consideration but would only proceed if the Sponsor concludes there are no regulatory or tax risks. The Sponsor has not approved staking yet, though liquid staking tokens could be evaluated if permitted. Any staking activity would be carried out through third-party providers.

Shares of the Sei ETF can be created or redeemed by Authorized Participants through either cash or in-kind transfers. In cash transactions, a third-party SEI Counterparty converts cash into SEI and deposits it with the Custodian, since the Trust does not directly exchange SEI with Authorized Participants. For in-kind transactions, Authorized Participants provide SEI directly to the Trust, which then issues shares equivalent to the net asset value. Redemptions can be settled in SEI or in cash, calculated according to the benchmark rate.

The company now awaits an SEC decision, though the regulator has a record of delaying ETF rulings, including a recent extension on the 21Shares Polkadot ETF. Coinbase Custody Trust Company will manage custody for the SEI ETF, as it previously did for 21Shares’ ONDO token ETF. The filing notes that all assets will be stored in cold wallets, with private keys kept offline to reduce risks of theft or loss.

Canary Capital filed its SEI ETF proposal earlier this year

With this application, 21Shares enters an increasingly competitive space for SEI-based ETFs, initiated by Canary Capital’s S-1 filing and followed by Cboe’s 19b-4 for a staked product. In April, Canary Capital submitted its proposal, which stated it would give institutional and retail investors access to staked SEI and potential staking rewards.

After Canary Capital’s submission, Justin Barlow, executive director of the Sei Development Foundation, described ETFs as a pathway to broader adoption and a bridge between crypto markets and traditional finance.

Several other firms have also submitted applications for altcoin ETFs with the SEC. VanEck, Bitwise, and Grayscale have proposed Solana ETFs, while asset managers are exploring funds tied to XRP, Cardano, Dogecoin, HBAR, and Litecoin. Bloomberg analysts have estimated the likelihood of approval for many of these products at over 90%.