In a significant move, ARK 21Shares and VanEck have taken the lead in launching the first-ever Ethereum (ETH) spot Exchange-Traded Fund (ETF) in the United States.
ARK 21Shares is seeking approval for its ARK 21Shares Ethereum ETF, aiming to track the performance of ETH directly by holding the cryptocurrency. The ETF’s objective is to provide investors with a convenient and secure way to invest in Ethereum’s price movements.
The Chicago Board Options Exchange’s (CBOE) BZX exchange has submitted applications to the U.S. Securities and Exchange Commission (SEC) to launch the first spot ether exchange-traded funds (ETFs) in the United States. This move marks a significant step in bringing ETH to the ETF market.
ARK 21Shares filed its S-1 document on September 6, signaling its intent to offer an Ethereum ETF. VanEck had previously filed for a similar ETF in July 2021. These filings have officially initiated the SEC’s decision-making process.
Coinbase Custody as the Trust’s Custodian
Coinbase Custody has been designated as the custodian for both ARK 21Shares and VanEck’s ETFs. Coinbase Custody is a well-established name in the crypto industry, serving other major fund providers like Grayscale and BlackRock.
ARK Invest has proposed the creation of a surveillance-sharing agreement with Coinbase, a measure aimed at enhancing transparency and regulatory compliance. This proposal aligns with their previous Bitcoin spot ETF application.
Market Impact and Price Movements
The announcement of the Ether ETF filings briefly impacted the prices of both Bitcoin (BTC) and Ethereum (ETH), with BTC briefly rising to $25,900 and ETH reaching $1,655. However, these assets quickly reverted to their pre-announcement values.
The SEC has historically favored futures-based ETFs for Bitcoin due to investor protections offered by the CME futures market. This stance has hindered the approval of a Bitcoin spot ETF.
The SEC has yet to approve any Ethereum ETFs, citing Ethereum’s higher price volatility and regulatory uncertainties compared to Bitcoin. Recent developments, including Grayscale’s court victory, have prompted multiple ETF applications for both Bitcoin and Ethereum.
Outlook and Timeline
Bloomberg ETF analyst James Seyffart projects that the SEC’s final decision on ARK Invest and VanEck’s ETF applications could be expected by May 23, 2024. This timeline coincides with deadlines for various Bitcoin spot ETF applicants. The SEC’s response to Grayscale’s spot Bitcoin ETF bid may influence the outcome of these applications.
Grayscale has argued that there is no longer justification for favoring futures-based Bitcoin ETFs over spot ETFs, emphasizing the potential benefits for investors.
In an interview with CryptoNews, Felix Shipkevich, the founder and principal of a New York-based law firm, offers insights into the evolving landscape of crypto ETFs and the implications of recent regulatory developments.
