ARK Invest and 21Shares have revised their proposals for spot Ethereum exchange-traded funds (ETFs) by removing staking programs from the updated filings. In the revised filing on Friday, May 10, a provision related to 21Shares holding a portion of the fund's assets through a third-party provider was eliminated. Previously, the filing mentioned the possibility of the sponsor pledging a portion of the trust's assets through trusted pledge providers.
The initial filing on February 7 included a provision stating that 21Shares anticipated receiving Ethereum as staking rewards and intended to classify the resulting proceeds as income generated by the fund. However, the latest filing omits this specific section while retaining broader comments on the potential drawbacks, such as significant penalties, temporary limitations on accessing funds during bonding and unbonding, and the potential impact on Ethereum's price.
Bloomberg ETF analyst Eric Balchunas speculated that the removal of the staking programs from the updated proposals could be a response to potential feedback from the U.S. Securities and Exchange Commission (SEC). He suggested that this change might represent an effort to refine the application or strategically limit the information available to the SEC, potentially minimizing the risk of rejection.
In September 2023, ARK Invest and 21Shares initially submitted applications for spot Ethereum ETFs, aiming to offer direct investment opportunities in Ethereum if approved. The ETFs would trade on the Cboe BZX exchange, utilizing the CME CF Ether USD Reference Rate – New York version. 21Shares serves as the sponsor, Delaware Trust Company as the trustee, Coinbase Custody Trust Company as the custodian of the underlying ether assets, and ARK Investment Management as the subadviser responsible for marketing the shares.
The SEC has been postponing decisions on spot Ethereum ETF proposals, including those from Invesco Galaxy, Grayscale, Franklin Templeton, VanEck, and BlackRock. The regulator faces deadlines for decisions on various proposals, with VanEck's application due on May 23, followed by ARK and 21Shares' applications on May 24. Despite the SEC's approval of a spot Bitcoin ETF in January, optimism for spot Ethereum ETF approval has diminished, with Balchunas revising the likelihood of approval by the end of May from about 70% to 25%.
