ARK and 21Shares drop staking plans from Ethereum ETF proposal

As a seasoned crypto investor with a keen interest in Ethereum and ETFs, I’ve been closely following the developments surrounding ARK Invest and 21Shares’ updated spot Ethereum ETF proposal. The recent removal of the staking clause in their latest filing is a noteworthy change that merits my attention.

In our recent Ethereum ETF proposal update, submitted on May 10, ARK Invest and 21Shares chose to eliminate their staking plans from the document.

In the recent filing made public on Friday, there is no longer a mention that 21Shares would delegate the staking of a portion of the fund’s assets using external providers. The wording now reads, “The Sponsor might choose to stake a portion of the Trust’s assets through trusted Staking Providers at their discretion.”

As a researcher studying the Feb. 7 filings of these companies, I’ve noticed they disclosed their expectation to receive Ethereum (ETH) as rewards for staking, which they plan to categorize as income earned by the fund.

The most recent submission deletes the specific passage, yet it preserves more general remarks. These comments encompass financial losses brought about by steep penalties, restricted access to funds during the bonding and uncapping processes, and possible effects on Ethereum’s value.

As a Bloomberg ETF analyst, I’ve observed that in a recent post by my colleague Erich Balchunas on topic X, he suggests that an update to the related instrument may be an attempt to fine-tune its application in anticipation of potential Securities and Exchange Commission (SEC) feedback. Even though no formal comments have been released yet from the SEC.

Another possibility, according to Balchunas, is that this shift represents a desperate measure (“Hail Mary”) or a calculated move to restrict the SEC’s access to data they might use to reject the proposal.

In September, ARK Invest and 21Shares made an application to launch a new Ether exchange-traded fund (ETF) on the Cboe BZX Exchange. This fund is designed to give investors direct exposure to Ether. The price of this ETF will be determined using the CME CF Ether-Dollar Reference Rate – New York Variant.

As a crypto investor, I’d describe it this way: 21Shares is the entity behind the creation and management of this investment product. Delaware Trust Company is the trusted third party that holds the Ethereum assets in safekeeping on behalf of the investors. Coinbase Custody Trust Company plays a role in securing these Ether assets. ARK Investment Management, on the other hand, markets and advises on the shares, utilizing their expertise to attract potential investors.

As a researcher studying the Securities and Exchange Commission (SEC) actions regarding Ethereum Exchange-Traded Funds (ETFs), I’ve noticed that the SEC has been postponing decisions on several spot Ethereum ETF proposals in recent weeks. Specifically, the decision on the Invesco Galaxy spot Ethereum ETF proposal was delayed, and the deadlines for other proposals from Grayscale, Franklin Templeton, VanEck, and BlackRock were also pushed back.

As a crypto investor, I’m keeping a close eye on the regulatory developments regarding the upcoming Ethereum exchange-traded product (ETP) applications. VanEck’s application is set to be decided upon by the regulator on May 23. Following that, Ark and 21Shares will present their applications for consideration on May 24.

In January, the SEC gave its green light for trading and listing spot Bitcoin ETFs on American exchanges. In contrast, hopes for approving spot Ethereum ETFs have significantly decreased as of late. According to Bloomberg ETF analyst Eric Balchunas, the probability of a spot Ethereum ETF being approved by late May has dropped from approximately 70% to just 25%.

2024-05-11 11:21

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