ARK Investment and 21Shares Revise Ethereum ETF Proposal, Improve Cash Creation and Redemption
A revised Ethereum ETF proposal from ARK Investment and 21Shares proposes to only facilitate cash delivery in creation and redemption process.
A revised spot Ethereum exchange-traded fund (ETF) proposal from investment management company ARK Investment and 21Shares proposes to only facilitate the delivery of cash in its creation and redemption process. The creation and redemption of shares in ETFs had previously been a focal point in discussions between issuers seeking to launch spot Bitcoin ETFs and the Securities and Exchange Commission (SEC).
The SEC is likely inclined towards a cash model, wherein issuers must promptly sell stored assets to generate cash for returning to investors. This stands in contrast to an in-kind model favoured by certain asset firms such as BlackRock during the approval process for their spot Bitcoin ETF, providing managers with greater flexibility in portfolio management.
Bloomberg Intelligence analyst Eric Balchunas observed a modification in the filing submitted by ARK Investment and 21Shares.
The revised filing incorporates a new staking component, indicating that the “Sponsor” may periodically engage one or more trusted “Staking Providers” to stake a portion of the “Trust’s” assets. The “Sponsor” anticipates primarily staking ETH, Ethereum’s native tokens from the Trust’s Cold Vault Balance.
“In consideration for any staking activity in which the Trust may engage, the Trust would receive certain staking rewards of ether tokens, which may be treated as income to the Trust. The amount of ether the Trust may receive as a reward for its staking activity can vary significantly,” said the filing.
ARK Investment and 21Shares Seek Approval for Spot Ethereum ETF
ARK Investment and 21Shares applied for the spot Ethereum ETF in September, outlining that the fund aims to offer direct exposure to ETH. It is set to trade on the Cboe BZX Exchange, utilizing the CME CF ETH-Dollar Reference Rate.
In the initial filing, 21Shares is identified as the sponsor of the Trust, while Delaware Trust Company serves as the trustee and Coinbase Custody Trust Company acts as the custodian. ARK Investment Management takes on the role of sub-adviser for the Trust, offering support in marketing the 21Shares. Last year, the SEC further postponed the decision timeline for the ARK Investment and 21Shares spot Ethereum ETF and solicited public comments.
The amended application from ARK Investment and 21Shares, highlighting a cash model and incorporating staking components, is set to facilitate the potential timely approval of the spot Ethereum ETF, reflecting the evolving dynamics in the regulatory landscape.
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