ARK/21 Shares Amends Ether ETF Filing; Invesco’s Delayed by SEC

ARK/21 Shares Amends Ether ETF Filing; Invesco’s Delayed by SEC

Ether price jumps after Ark/21 Shares proposal adds language about crypto staking.

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Finance Reporter
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Reviewed by: etf.com Staff
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Edited by: Ron Day

ARK Invest and 21 Shares updated their ether exchange-traded fund filing to include language that puts the proposed fund closer in alignment with recently approved spot bitcoin funds, a day after the Securities and Exchange Commission delayed its decision on Invesco and Galaxy’s joint ether filing. 

The price of ether, the cryptocurrency used on the Ethereum blockchain platform, jumped 2.4% today, according to Coindesk, and has gained 5.7% this year.

The Ark filing adds detail on cash redemption, a detail that was ironed out in spot bitcoin applications before those ETFs were approved Jan. 10. It also has fresh details on so-called staking, a security measure where individuals validate transactions on the blockchain and lock up some of their crypto as part of that process. 

Regarding the Invesco delay, the agency said in a filing posted to its website Feb. 6 that it was taking more time to review the Invesco Galaxy Ethereum ETF, which would offer investors direct exposure to the second largest cryptocurrency, ethereum, in an ETF. The SEC also said it’s seeking public comment on key regulatory issues.   

“The current administration’s SEC has taken a really broad view of which crypto tokens ought to be securities” Marc D’Annunzio, general counsel at crypto trading and custody firm Bakkt, said on a recent episode of Talk ETFs. “Until that fundamental issue is resolved, I think that will slow the approval of a spot ETF for ethereum and other tokens that the commission [believes] could potentially be securities.”  

Invesco Ethereum ETF Delay

The agency last delayed Invesco’s application in December. They previously delayed Grayscale and BlackRock’s version of the spot ether ETF in January. The agency must make a final decision May 23, which is the last day the agency can decide to approve or disapprove VanEck’s spot ether fund.  

While the SEC allows ETFs that offer investors exposure to ethereum futures contracts, approving a spot product that is directly backed by the cryptocurrency is new territory with a raft of regulatory considerations, according to industry executives and analysts. The agency only recent allowed ETF issuers to launch spot bitcoin ETFs a decade after the first firm applied for one in a highly anticipated regulatory saga. Since then, the spot bitcoin ETFs have seen a historic launch—bringing in over $7 billion in investor money.  

In the delay document, the SEC presented a set of questions that it asked public commenters to address, many of which were related to market manipulation and fraud. For example: “Do commenters agree that arguments to support the listing of Bitcoin ETPs apply equally to the Shares?  

The comment period is 21 days, according to the filing.  

Spot Ether ETF Race 

While bitcoin is the largest cryptocurrency, many in the industry argue that ether has a distinct set of use cases that would make the cryptocurrency particularly useful to financial advisors.  

A key roadblock to approving the vehicles is whether the agency considers ethereum to be a security, commodity, or something else entirely— a designation the SEC has so far avoided making officially.  

Contact Lucy Brewster at [email protected].  

Lucy Brewster is a finance reporter at etf.com covering asset managers, emerging technologies, and regulation. She hosts etf.com webinars and appears on Exchange Traded Fridays, etf.com’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.