ARK Invest Seeks Approval for Ethereum ETF from SEC
ARK Invest recently submitted an official request to the SEC for the issuance of a spot Ethereum ETF. If this request is approved, it would mark the first ETF to be directly collateralized in ETH and authorized by the U.S. equity market overseer.
Exploring ETFs on Ethereum
While ETFs on Ethereum already exist in Europe and Canada, they are collateralized directly in ETH. In the U.S., only ETFs based on Ethereum price futures contracts have received approval. The SEC has been hesitant to approve ETFs directly based on cryptocurrencies, opting instead for futures contract-based ETFs.
After the recent ruling against the SEC in the Grayscale case, many believe that the agency no longer has the ability to reject similar ETF applications. Notably, BlackRock, a major player in the financial industry, is among the applicants, boasting a high approval rate for its ETF requests.
The Advantages of Crypto ETFs
Crypto ETFs that replicate cryptocurrency price movements offer several advantages. Firstly, investors do not need to personally custody the cryptocurrencies as the fund manager takes on this responsibility. Additionally, these fully regulated instruments trade on traditional exchanges, making them accessible to institutional clients and those who prefer using regulated financial products.
However, drawbacks include the reliance on third-party custody, the need to use the traditional financial system, and the inability to trade peer-to-peer.
About ARK Invest and Their Ethereum ETF
ARK Investment Management, founded in 2014 by Cathie Wood, is a renowned U.S. investment management company that manages various actively managed ETFs. They became one of the top 10 ETF issuers globally and are now seeking approval for their spot ETH ETF, called Ark 21Shares Ethereum ETF, in partnership with 21Shares, a leading crypto ETF issuer based in Switzerland.
The ETH holdings will be entrusted to Coinbase Custody Trust Company.
Hot Take
The prospect of an Ethereum ETF represents a significant milestone for the crypto market. If approved, it could open doors for increased institutional participation and further legitimize digital assets within traditional financial systems.