ARK 21Shares has revised its spot Ether exchange-traded fund (ETF) application to mirror its approved spot Bitcoin ETF, incorporating a cash-creation model. Additionally, the firm has proposed staking a portion of the ETF’s Ether to generate extra income.
In December 2023, ARK 21Shares, alongside BlackRock, transitioned their spot Bitcoin ETFs to a cash creation and redemption model, following discussions with the U.S. securities regulator.
Initially, ARK 21Shares suggested an in-kind redemption model for its spot Ether ETF, involving non-monetary payments such as BTC. However, the updated approach involves purchasing Ether equivalent to the order amount and depositing it in the trust’s account with the custodian to create shares of the ETF.
According to Bloomberg ETF analyst Eric Balchunas, these changes, outlined in the latest Form S-1 amendment filed on Feb. 7, bring the spot Ether ETF application in line with approved spot Bitcoin ETFs.
The amended S-1 filing also introduces the prospect of staking a portion of the trust’s assets through trusted third-party staking providers. Staking rewards would be treated as income for the trust.
ARK 21Shares acknowledges potential risks associated with staking, such as the loss of ETH via slashing and extended lock-up periods for staked ETH. The firm has put staking-related paragraphs in brackets, indicating openness to discussions with regulators.
Bloomberg ETF analyst James Seyffart has adjusted the odds of a spot Ether ETF approval in 2024 from 70% to 60% on Jan. 30. However, Seyffart expects a decision on all applicants, including ARK 21Shares, by May 23, similar to the SEC’s decision on spot Bitcoin ETFs on Jan. 10.
The United States Securities and Exchange Commission must decide on various ETF applications, including VanEck’s by May 23, ARK 21Shares by May 24, Hashdex by May 30, Grayscale by June 18, and Invesco by July 5. Applications from Fidelity and BlackRock are due for decisions by Aug. 3 and Aug. 7, respectively.
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