Cathie Wood’s asset management firm, ARK Invest, has filed for the United States’ first Ether (ETH) spot ETF weeks after regulators placed the company’s Bitcoin ETF application on the backburner.
Fellow investment manager VanEck has submitted a similar 19b-4 application, starting the clock for when regulators must approve or deny each submission.
Ark’s Ether ETF Pitch
In an S-1 filed with the Securities and Exchange Commission (SEC) on Wednesday, the ARK21Shares Ethereum ETF would “track the performance of ether” by holding ETH to back the value of its shares.
The custodian of the Trust would be Coinbase Custody, which serves other major fund providers like Grayscale and BlackRock. It also proposed forming a surveillance sharing agreement with Coinbase, as was proposed with its Bitcoin spot ETF application.
The announcement inspired a brief price pump for both Bitcoin (BTC) to $25,900 and ETH to $1655, but both assets quickly returned to their pre-announcement values.
“Shareholders in the Trust will not benefit from the protections afforded to investors in ether futures contracts on regulated futures markets,” the filing read.
In regard to Bitcoin, the SEC has historically shown a strong preference for futures ETFs, and continues to stonewall approval for a spot ETF. The agency’s chairman Gary Gensler has argued that the CME futures market provides investor protections that can’t be satisfied by spot markets.
The commission is yet to approve any Ether ETFs, with potential applicants hesitant due to the asset’s greater price volatility and regulatory uncertainty compared to Bitcoin.
However, recent developments have inspired fund managers to flood the SEC with both Bitcoin spot ETF and Ether futures ETF applications. Some reports suggest that the latter set of applications was triggered by the SEC’s approval of a leveraged Bitcoin futures ETF in June, which was subject to major criticism from the crypto industry.
When Ether ETF?
Bloomberg ETF analyst James Seyffart estimates that the SEC’s final deadline to approve both Ark and VanEck’s filings will be May 23, 2024. That’s roughly the same deadline projection as for multiple Bitcoin spot ETF applicants, due between March 15 and March 19.
An approval could largely depend on how the SEC responds to Grayscale’s spot Bitcoin ETF bid after losing to the company in court. Grayscale stressed to the agency in a recent letter that it no longer has justification to favor futures Bitcoin ETFs over spot ETFs and that it ought to approve such a product to benefit investors.