Introduction
Ark Invest and 21Shares have recently filed paperwork with the Securities and Exchange Commission (SEC) to launch a spot Ether exchange-traded fund (ETF) in the U.S., making them the first to file for such a product. This comes after previously filing for an Ether futures ETF, but the spot ETF is different as it directly invests in and holds Ether.
The ARK 21Shares Ethereum ETF
The ARK 21Shares Ethereum ETF, also known as the Trust, is an exchange-traded fund that issues common shares of beneficial interest. The Trust’s investment objective is to track the performance of Ether, as measured by the CME CF Ether-Dollar Reference Rate – New York Variant. The Trust will hold Ether and value its shares daily based on the Index.
Custodian and Redemption Process
Coinbase Custody Trust Company has been selected as the custodian for the Trust. For selling or redeeming shares, the Trust will conduct ‘in-kind’ transactions in blocks of 5,000 shares known as Baskets. Financial firms authorized as ‘Authorized Participants’ will deliver Ether to the Trust’s account in exchange for shares, and the Trust will deliver Ether to these participants upon share redemption.
Spot ETF Approval
A growing number of financial institutions are looking to launch crypto-related products as the asset class gains broader adoption. While the SEC is yet to approve any spot crypto ETFs, the recent ruling by the U.S. Court of Appeals has increased the likelihood of approval for a spot ETF within the next year. Ether, being the second-largest cryptocurrency by market cap and having ample liquidity, is a strong candidate for a spot ETF.
Ark and 21Shares’ Filing Strategy
Ark and 21Shares filed for Ether futures ETFs previously but have now taken a proactive approach by seeking approval for a spot Ether ETF. This move indicates their eagerness to enter the market and not wait for decisions on the futures ETF applications.
Conclusion
The filing by Ark Invest and 21Shares for a spot Ether ETF in the U.S. marks an important development in the cryptocurrency market. As the industry continues to evolve, more financial institutions are exploring digital asset ETFs, with the hope of gaining regulatory approval and offering investors new ways to access crypto markets.
