ARK Invest and 21Shares Seek Approval for Spot Ether ETF

ARK Investment Management and 21Shares have jointly proposed the creation of a spot Ether ETF. This move follows their request for the listing of two Ether futures ETFs. 

In a filing submitted on September 6, the two firms petitioned the U.S. Securities and Exchange Commission (SEC) to endorse the listing of shares for the ARK 21Shares Ethereum ETF. 

This investment vehicle will track Ether’s performance based on the Chicago Mercantile Exchange CF Ether-Dollar Reference Rate and will utilize Coinbase as its custodian.

ARK Invest and 21Shares are among several companies seeking approval for spot crypto ETFs following Grayscale’s successful appeal that compelled the SEC to reconsider the conversion of its Bitcoin Trust into a Bitcoin ETF. 

The SEC recently announced a delay in its decision on spot Bitcoin ETF applications from seven companies, including BlackRock. 

However, ARK Invest’s and 21Shares’ spot Bitcoin ETF is not subject to this delay, as its deadline for approval, denial, or further delay is set for November 11.

This marks the third attempt by ARK Invest and 21Shares to launch a spot Bitcoin ETF since 2021. 

In August, the firms also proposed listings for two ETH futures ETFs, a product category that has seen more success with the SEC, with several approvals granted in 2021.

BOOM: ARK just filed for a Spot Ether ETF, the first one.. prob more coming imminent pic.twitter.com/PjK5aSNPlS

— Eric Balchunas (@EricBalchunas) September 6, 2023

Ether Price Reaction

According to data from Cointelegraph Markets Pro, Ether experienced a brief surge of approximately 3%, moving from $1,623 to $1,669 before settling in the range of $1,620 to $1,640.

In a separate development, Cboe’s BZX exchange is working to launch the first spot of Ether ETFs in the United States. 

The exchange has submitted the required 19b-4 documents for ETF products linked to Ark 21Shares and VanEck.

Coinbase will play a crucial role in these ETFs, acting as the partner for both offerings and as the custodian for the Ether held by the Ark 21Shares trust. The custodian for VanEck’s ETF was not disclosed.

If one or both of these applications gain approval, it will be a significant milestone for the U.S. market. 

Currently, there are no spot crypto ETFs available, although established financial giants like BlackRock and Fidelity have initiated efforts to obtain regulatory approval for a spot Bitcoin ETF. 

Additionally, several asset managers have recently submitted applications for Ether futures ETFs.

Historically, the SEC has rejected spot Bitcoin ETF applications. However, the agency recently encountered a setback when an appeals court ruled that its rejection of Grayscale’s bid was “arbitrary and capricious” given the existence of Bitcoin futures ETFs. 

The court emphasized the high correlation between the assets underlying Bitcoin futures ETFs and those that would support a spot Bitcoin ETF.

While the SEC has traditionally been cautious in its approach, recent legal rulings and the growing demand for crypto investment products may lead to a shift in its stance.

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