Ark Invest and 21Shares have initiated a race to introduce a groundbreaking spot ether Exchange-Traded Fund (ETF) in the US, marking the first attempt of its kind in the country. This move comes at a time when the Securities and Exchange Commission (SEC) is actively considering various spot bitcoin ETFs and ether futures funds.
In their filing on Wednesday, Ark Invest and 21Shares unveiled their proposal for the “Ark 21Shares Ethereum ETF,” showcasing their commitment to expanding their cryptocurrency product portfolio. Unlike recently proposed ether futures ETFs, their forthcoming offering would directly hold ether, the second-largest cryptocurrency by market capitalization, valued at approximately $195 billion as of 2 pm ET, trailing only behind bitcoin with a $500 billion market cap.
If approved, this proposed ETF will be traded on the Cboe BZX Exchange, although the filing did not disclose specific details such as the ticker symbol or fee structure.
While the SEC declined to comment on the filing, sources familiar with the matter, speaking on the condition of anonymity, suggest that recent developments in the cryptocurrency space have created an opportune moment to introduce ether-related products. Notably, the SEC has been facing pressure following a court loss to Grayscale Investments, where the DC Circuit Court of Appeals ruled that the SEC’s decision to approve bitcoin futures products while denying Grayscale’s Bitcoin Trust (GBTC) conversion into an ETF was “arbitrary and capricious.” Consequently, analysts from Bloomberg Intelligence have increased the likelihood of a US spot bitcoin ETF approval by the end of 2023 to 75% and believe there’s a 95% chance of approval by the end of 2024.
Prior to this development, several fund issuers had filed for ether futures ETFs in July and August, indicating the SEC’s willingness to consider such products after previously requesting companies to withdraw similar proposals earlier in the year. In contrast, other countries, like Canada, had already approved spot ether ETFs back in April 2021, following the approval of spot bitcoin ETFs.
Ark Invest, led by Cathie Wood, initially partnered with Swiss ETP issuer 21Shares to launch a spot bitcoin ETF in 2021. Despite initial rejections by the SEC, they have continued their efforts, most recently re-filing for a spot bitcoin product in April. This renewed push came shortly after BlackRock announced its plans to enter the bitcoin ETF market, prompting other fund issuers to re-enter the competition.
In addition to their spot ether ETF pursuit, Ark Invest and 21Shares are also involved as sub-advisers for three proposed crypto funds that incorporate bitcoin futures contracts. While the bid for a spot ether ETF marks a significant milestone, it was not entirely unexpected given their track record in the cryptocurrency ETF space.
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