Background and Strategic Significance of the SUI ETF Application
On January 7, 2025, leading crypto asset manager 21Shares registered a statutory trust entity named “21SHARES SUI ETF” in Delaware, signaling a key move into the U.S. regulated crypto ETF market. Delaware is a preferred jurisdiction for financial entities due to its flexible legal framework and mature trust regulatory system. This registration marks 21Shares’ first attempt to include the native token of the Sui blockchain (SUI) in an exchange-traded fund (ETF), paving the way for a formal application to the U.S. Securities and Exchange Commission (SEC).
21Shares is no stranger to Sui-related financial products. Back in 2024, it launched a SUI staking ETP (Exchange-Traded Product) in Switzerland, offering European investors a compliant way to gain exposure without directly holding tokens. The U.S. expansion reflects growing institutional interest in high-performance blockchain assets. Sui, developed by Mysten Labs—founded by former Meta engineers—focuses on high throughput (theoretical peak at 297,000 TPS) and low-latency transactions. Since its mainnet launch in 2023, Sui’s Total Value Locked (TVL) surged 81% following the Mysticeti upgrade in August 2024, reaching $902 million, briefly surpassing Solana in user activity.
Competitive Landscape and Market Dynamics
21Shares is not alone. On March 18, 2025, asset manager Canary Capital became the first to officially file an S-1 form for a SUI ETF with the SEC, causing SUI’s price to jump 6% in a single day—demonstrating the market’s strong anticipation for regulated financial products. Additionally, VanEck filed for a BNB ETF on April 2, 2025, and Fidelity Investments plans to launch an Avalanche (AVAX)-themed fund, signaling an intensified battle for public blockchain assets among institutions.
The Sui ecosystem now includes decentralized exchanges, lending protocols, and blockchain gaming. For example, DeFi protocol Navi saw a 210% quarter-over-quarter trading volume growth in Q4 2024, and game platform Panzerdogs attracted over 300,000 active users via its NFT staking mechanism. Approval of a SUI ETF would likely boost funding and user inflows into such ecosystem projects. Investors can already trade SUI on JuCoin or earn on-chain yields via staking tools.
Technology Upgrades and Regulatory Challenges
Sui’s technical strengths are a core reason for institutional interest. The Mysticeti upgrade in August 2024 made its transaction processing 4.5 times faster than Solana’s and reduced validator hardware requirements by 70%, enabling broader participation and enhancing decentralization. Moreover, Sui’s unique parallel transaction processing allows multiple smart contracts to run simultaneously, reducing congestion—a major benefit in NFT minting and gaming applications.
However, SUI ETF approval faces several regulatory hurdles. The SEC remains cautious about ETFs based on assets other than Bitcoin and Ethereum. Approval criteria include risks of market manipulation, transparency of custody arrangements, and liquidity adequacy. Canary Capital’s previous filings for XRP and DOGE ETFs have been delayed multiple times due to similar concerns. 21Shares must demonstrate that its custodian partners (such as Coinbase Custody) comply with SEC’s asset segregation rules and form surveillance-sharing agreements with regulated exchanges like Nasdaq to mitigate manipulation risks. Additionally, whether SUI is deemed a security remains a potential challenge—although the SEC sued Coinbase in 2023 over 13 allegedly unregistered tokens, SUI has not yet appeared on any regulatory “grey list.”
Potential Impact on the Crypto Market
If the SUI ETF gains approval, it could trigger multiple ripple effects:
Liquidity Boost:
Traditional investors could gain SUI exposure via brokerage accounts without managing private keys or on-chain transactions, possibly attracting billions in institutional capital. For comparison, the January 2024 approval of U.S. Bitcoin ETFs brought in over $12 billion in three months for BlackRock and Fidelity, pushing Bitcoin past $73,000. A similar effect could propel SUI to new highs.
Redefining Public Blockchain Competition:
Solana currently ranks third with $10.4 billion in TVL, but its ecosystem growth has slowed (only 12% in Q1 2025). With ETF-fueled capital inflow, Sui could catch up rapidly. Other high-performance chains such as Avalanche and Near may follow suit with ETF filings, driving diversification in altcoin financial products.
Long-Term Trends and Investor Strategies
The SUI ETF application highlights two major trends: rising institutional recognition of public blockchain tech and accelerating regulatory compliance. Sui’s parallel processing, low gas fees, and user-friendly design (e.g., Gmail login integration) have gained favor among developers and users. ETF approval would solidify its position as an “enterprise-grade blockchain.” Political shifts in the U.S. could also impact approval speed—a crypto-friendly SEC chair, for instance, might lower regulatory resistance.
Balancing Opportunity and Risk for Investors:
Opportunities:ETF-driven liquidity premiums could benefit early holders. Tokens from Sui’s ecosystem (e.g., NAVI, PANZ) may also rise in tandem.
Risks:Delays in approval could cause short-term volatility, and ecosystem adoption may fall short of expectations. A dollar-cost averaging (DCA) strategy is recommended to mitigate entry risks, and investors should closely track SEC developments.
Neason Oliver
