Ark Invest and 12Shares Refile Ethereum ETF Application
Ark Invest and 12Shares have refiled their joint application for a spot market Ethereum ETF. The amendments align the application with recently approved spot Bitcoin ETFs by the US Securities and Exchange Commission (SEC), according to Bloomberg ETF analyst Eric Balchunas.
Elaboration on Share Creation and Redemption Process
The revised application provides more details on the creation and redemption process of the ETF shares. This mechanism ensures transparency and keeps the share price of the funds close to the net asset value (NAV) of the underlying assets. Authorized participants (APs), regulator-approved institutions, are responsible for buying the underlying Ether and maintaining liquidity. They receive a block of shares at NAV to sell on secondary markets, closing any premium or discount gaps through arbitrage opportunities.
Possibility of Staking Rewards and Liquidity Risks
The new filing mentions the sponsor, 21Shares, potentially staking some of the fund’s underlying Ether to take advantage of staking rewards. However, this may make the staked tokens inaccessible for a period of time, posing liquidity risks.
Ethereum ETFs Expected Soon
Crypto and ETF analysts believe that Ethereum ETFs are likely to be approved next by the SEC. Other regions like Canada and Europe have already approved them, accumulating billions in assets-under-management. Standard Chartered Bank predicts approval before May 23 this year. The classification of Ethereum as a security may pose challenges for approval, as it would increase SEC oversight. The launch of Ether custody by the only SEC-approved crypto company in the US could compel the SEC to clarify its stance on Ethereum.
Hot Take: Ark Invest and 12Shares Make Progress in Ethereum ETF Bid
Ark Invest and 12Shares have made important revisions to their Ethereum ETF application, aligning it with recently approved Bitcoin ETFs. The amendments focus on the share creation and redemption process, as well as the possibility of staking rewards and liquidity risks. Analysts predict that Ethereum ETFs will be approved soon, considering the success of crypto ETFs in other regions. However, the SEC’s classification of Ethereum as a security could pose challenges. The launch of Ether custody by a US-based crypto company may prompt the SEC to clarify its stance on Ethereum. Overall, the progress made by Ark Invest and 12Shares brings us closer to the introduction of Ethereum ETFs.
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