June 23, 2024

ARK Invest and 21Shares Seek Regulatory Approval for Ether ETF in the U.S.

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When the wheels start moving there is little that can be done then create the regulatory framework to support it. This is significant in the cryptocurrency markets, asset management firms ARK Invest and 21Shares have jointly applied for regulatory approval to launch an exchange-traded fund (ETF) that would directly hold Ethereum (ETH), according to a filing made to the U.S. Securities and Exchange Commission (SEC) on Wednesday.

The proposed ETF, known as the Ark 21Shares Ethereum ETF, represents the first attempt to list such a fund in the United States that directly invests in Ethereum, the second-largest cryptocurrency by market capitalization.

One notable aspect of this application is the choice of custody for the ETF’s assets. The fund aims to have its assets safeguarded by Coinbase Custody Trust Company, a trusted name within the crypto industry known for its secure custody services.

Upon news of this development, both ether (ETH) and bitcoin (BTC) experienced a brief surge in their prices. However, this initial excitement proved to be short-lived, as both cryptocurrencies quickly returned to levels observed prior to the ETF filing.

This filing follows a series of applications for a highly sought-after spot bitcoin ETF, including a collaborative effort by ARK and 21Shares. The SEC recently postponed its decision on all these applications, keeping the crypto community eagerly awaiting further developments.

The filing coincides with expectations of SEC approval for the first futures-based ether ETF, with a decision anticipated on or before mid-October. This development underscores the growing interest in crypto ETFs and the increasing recognition of digital assets within traditional financial systems.

Industry experts anticipate a surge in applications for more crypto ETFs, particularly in the wake of Grayscale’s recent legal victory against the SEC. A spot ETH ETF is expected to be a prominent contender, given its structural similarities to BTC, with actively traded futures and spot markets on the Chicago Mercantile Exchange (CME), a crucial regulated marketplace that caters to institutional investors. This will open the doors to other crypto related ETFs over time, viable blockchains with native coins such as Avalanche, Cardano, Pecu Novus and XRP could very well be on the minds of power players such as ARK and others.

The crypto story is evolving every day and it will continue to do so as they begin to integrate into traditional financial structures, the pursuit of ETFs becomes a critical avenue for investors to gain exposure to digital assets. The filing by ARK Invest and 21Shares for an Ethereum ETF represents that evolution and they are spot on, no pun intended.

Terry Jones
Digital Assets Desk

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