Cathie Wood’s ARK Invest Files for First Ether (ETH) Spot ETF
Get ready for a groundbreaking development in the world of cryptocurrency. Cathie Wood’s asset management firm, ARK Invest, has taken a significant step by filing for the first Ether (ETH) spot exchange-traded fund (ETF) in the United States. This move comes shortly after regulators decided to put the company’s Bitcoin ETF application on hold.
VanEck Also Enters the Race
ARK Invest is not alone in this endeavor. Fellow investment manager VanEck has also submitted a similar application, known as a 19b-4 application, to the regulators. The clock is now ticking for the regulators to review and either approve or deny these submissions.
The Pitch for ARK’s Ether ETF
In the recently filed S-1 document with the Securities and Exchange Commission (SEC), ARK21Shares Ethereum ETF aims to mirror the price movement of Ether by utilizing ETH as a backing asset. To ensure the security of the Trust, Coinbase Custody, a trusted custodian for major fund providers like Grayscale and BlackRock, would be responsible for safeguarding the assets. Additionally, ARK Invest proposes entering into a surveillance sharing agreement with Coinbase, similar to their previous proposal for the Bitcoin spot ETF application.
The announcement of ARK’s Ether ETF filing led to a temporary price increase for both Bitcoin (BTC) and ETH. However, the prices quickly reverted to their pre-announcement levels.
“Shareholders in the Trust will not benefit from the protections afforded to investors in ether futures contracts on regulated futures markets,” the filing read.
SEC’s Preference for Futures ETFs
When it comes to Bitcoin, the SEC has consistently favored futures ETFs over spot ETFs. The commission’s chairman, Gary Gensler, argues that the regulated futures market provided by CME offers more investor protections compared to spot markets. As a result, the approval of a Bitcoin spot ETF has been delayed.
No Ether ETF Approvals Yet
Although the SEC has not yet approved any Ether ETFs, recent events have prompted fund managers to submit applications for both Bitcoin spot ETFs and Ether futures ETFs. The regulatory uncertainty and higher price volatility associated with Ether have made potential applicants hesitant. Some reports suggest that the SEC’s approval of a leveraged Bitcoin futures ETF in June has influenced the influx of Ether ETF applications.
When Can We Expect an Ether ETF?
According to Bloomberg ETF analyst James Seyffart, the SEC’s final deadline for approving both the ARK and VanEck filings is estimated to be May 23, 2024. This deadline aligns with the projected deadlines for multiple Bitcoin spot ETF applications, which are expected between March 15 and March 19.
The approval of an Ether ETF may also depend on the SEC’s response to Grayscale’s spot Bitcoin ETF bid. Grayscale, after winning a court battle against the SEC, emphasized in a recent letter that there is no longer any justification to favor futures Bitcoin ETFs over spot ETFs. They argue that approving a spot ETF would be in the best interest of investors.
Hot Take
The filing for the first Ether spot ETF in the US by ARK Invest marks a significant step in the mainstream adoption of cryptocurrencies. If approved, this ETF would provide investors with an opportunity to gain exposure to the price movements of Ether without directly holding the cryptocurrency. The SEC’s decision regarding these ETF applications will have a profound impact on the future of the crypto market and its accessibility to traditional investors.
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