Cathie Wood’s ARK Files for Ether ETF

While the SEC deliberates on a host of bitcoin ETF applications, a new class of cryptocurrency has entered the race: spot ethereum exchange-traded funds.  

Ark Investment Management LLC, along with crypto exchange traded product firm 21Shares, filed on Sept. 6 for an ETF that would track physically backed ethereum, the second largest cryptocurrency.  

According to the fund’s prospectus, the fund would “provide investors with the opportunity to access the market for ether through a traditional brokerage account without the potential barriers to entry or risks involved with holding or transferring ether directly or acquiring it from an ether spot market.”  The filing named Coinbase as the custodian. 

The application comes as the SEC lost a watershed lawsuit to Grayscale Investments on Aug. 29, regarding the agency’s inhibiting Grayscale from converting its Bitcoin Trust into an ETF. While the SEC allows ETFs that track bitcoin futures contracts—the largest being the $952 million Proshares Bitcoin Strategy ETF (BITO)—the agency has thus far blocked funds that track physical bitcoin.  

Ether ETF Race Heats Up

A slew of firms, including Bitwise Asset Management and Valkyrie Investments, recently applied for ETFs that track ether futures contracts amid reports that the SEC had warmed up to the idea of considering an ether futures fund. Yet for an ether futures ETFs to be approved, the agency would have to explicitly designate whether they consider ether a security or a something else, like a commodity, according to etf.com analyst Sumit Roy.  

In a virtual Bloomberg live roundtable last week, analyst Eric Balchunas said he was “surprised” not one firm had filed an ether spot ETF. “That should happen any day after the Grayscale ruling,” he said.  

The race for rolling out digital asset ETFs has largely been dominated by the same group of firms, from both traditional finance shops like BlackRock Inc. to crypto-focused firms like Grayscale.  

Cathie Wood’s ARK holds nearly $14 billion across 8 ETFs, according to etf.com data. The investment manager has teamed up with digital asset firm 21Shares on their proposed spot bitcoin fund and ether futures fund.  

Contact Lucy Brewster at [email protected].