In a move to possibly align more with the SEC regulatory framework, Ark Invest and 21shares have amended their filing for a spot ether ETF, introducing a cash creation and redemption mechanism that mirrors the SEC’s recent approval criteria for spot bitcoin ETFs.
Ark Invest and 21shares Amend Spot Ether ETF Filing, Now More Aligned With SEC Preferences
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Cathie Wood’s Ark Invest Updates Ether ETF Filing, Introduces Cash Mechanism
Ark Invest, led by Cathie Wood, in collaboration with 21shares, has filed an amended S-1 registration with the U.S. Securities and Exchange Commission (SEC) for a spot ether exchange-traded fund (ETF). The amendment, filed on Wednesday, introduces a cash creation and redemption mechanism for the ETF, a method favored by the SEC.
Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence, brought attention to the filing through a post on X, stating:
HERE WE GO AGAIN: Ark/21shares has just filed an amended S-1 for their spot Ether ETF, looks like they updated to be only cash creations and some other things that bring it in line with the recently approved spot BTC ETF prospectus.
This move is seen as a strategic alignment with the SEC’s regulatory framework, which recently facilitated the approval of spot bitcoin ETFs, emphasizing a preference for cash transactions over the previously contested in-kind models.
The updated filing not only introduces the shift to cash creations but also a novel component of staking ether. The document outlines a possibility for the fund to engage in staking through “one or more trusted third-party staking providers,” allowing the fund to earn rewards by locking up a portion of its holdings. This addition indicates a forward-looking approach by Ark Invest and 21shares, aiming to leverage the unique features of the Ethereum blockchain to generate additional income for the ETF.
The focus on a cash creation and redemption process marks a departure from the in-kind model, which offered managers more flexibility but was less favored by the SEC due to concerns over asset liquidity and valuation. “Authorized Participants will deliver only cash to create shares and will receive only cash when redeeming Shares,” the filing detailed, aligning with the SEC’s guidelines that aim to enhance the transparency and security of ETF transactions.
Ark Invest and 21shares had initially applied for the spot ether ETF in September 2023, proposing a fund that would offer direct exposure to ether and trade on the Cboe BZX Exchange.
Do you think the new amendments to Ark Invest and 21shares spot ether ETF are good? Share your thoughts and opinions about this subject in the comments section below.
