Ark Invest Seeks to Launch America’s First Spot Ethereum ETF
Cathie Wood’s Ark Invest has made a move to establish the first spot Ethereum ETF in the United States. The application, named ARK 21Shares Ethereum ETF, closely resembles filings for spot Bitcoin ETFs, which have been delayed by the Securities and Exchange Commission (SEC). The SEC recently announced that it requires additional time to make decisions following Grayscale’s recent legal victory.
In its application, Ark Invest has appointed Coinbase as a custodian, meaning the cryptocurrency exchange would hold the Ethereum that backs the shares of the ETF. The ETF itself would be traded on the Cboe BZX Exchange.
While the SEC has received multiple applications for futures-based Ethereum ETFs, Ark Invest’s bid goes a step further. Futures-based Bitcoin ETFs have been trading in the U.S. since ProShares’ launch in 2021. Now, Ethereum is expected to debut on Wall Street through futures-based ETFs. Approval for Ethereum futures ETFs, which track derivatives traded on the Chicago Mercantile Exchange, is anticipated as early as October.
Ark Invest’s Persistence in Pursuing ETFs
Ark Invest has faced regulatory delays not only with its Ethereum ETF application but also with its spot Bitcoin ETF application. The company initially filed for a spot Bitcoin ETF in June 2021.
Regarding futures-based Ethereum ETFs, hopeful applicants have typically been advised by the SEC to withdraw their applications shortly after filing. However, this time, these applications have remained under consideration by the SEC.
According to Bloomberg’s senior ETF analyst Eric Baclhunas, other companies are likely to follow in Ark Invest’s footsteps and submit similar applications in the near future. He believes there may already be pending applications.
The Impact of the Grayscale Court Ruling and Addressing SEC Concerns
A recent decision by the U.S. Court of Appeals for the D.C. Circuit favored Grayscale, stating that the SEC’s denial of Grayscale’s application to convert its Bitcoin Trust into a spot ETF was arbitrary. The court found that the SEC’s concerns about market manipulation were not consistent, given its approval of futures-based Bitcoin ETFs in the past.
In its application, Ark Invest argues that the Cboe BZX Exchange’s access to information about the CME’s Ethereum futures market should alleviate previous concerns raised by the SEC.
Hot Take
The establishment of America’s first spot Ethereum ETF by Ark Invest marks a significant milestone in the cryptocurrency market. With the SEC considering the approval of Ethereum futures ETFs in the near future, the potential for increased institutional investment and mainstream adoption of Ethereum grows. This development highlights the evolving regulatory landscape and the growing importance of cryptocurrencies in traditional finance.
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