The race to launch the first spot Ethereum exchange-traded fund (ETF) in the United States has officially begun, with ARK Invest and VanEck submitting their applications. The Chicago Board Options Exchange (CBOE) filed two 19b-4 applications on Wednesday, September 6, requesting for the ARK 21Shares Ethereum ETF and VanEck Ethereum ETF investment products to be listed on CBOE's BZX Exchange.
ARK Invest's S-1 filing with the Securities and Exchange Commission (SEC) details that the ARK21Shares Ethereum ETF would track the performance of Ether by holding ETH to back the value of its shares. Coinbase (NASDAQ:COIN) Custody is proposed to be the custodian of the Trust, serving other major fund providers like Grayscale and BlackRock (NYSE:BLK). The firm also proposed forming a surveillance sharing agreement with Coinbase, similar to its Bitcoin spot ETF application.
VanEck's S-1 filing dates back to July 2021, but specifics about their proposed ETF are not detailed in the context provided.
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. He also anticipates more spot Ethereum ETF filings to be submitted in the coming days.
The SEC has yet to approve any Ether ETFs, with potential applicants hesitant due to 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. This surge in applications was reportedly triggered by the SEC’s approval of a leveraged Bitcoin futures ETF in June, which faced major criticism from the crypto industry.
The SEC has shown a strong preference for futures ETFs over spot ETFs due to investor protection concerns. Its chairman Gary Gensler argues that regulated futures markets offer investor protections that spot markets cannot match.
The approval of these Ether ETFs could largely depend on how the SEC responds to Grayscale’s spot Bitcoin ETF bid after losing to the company in court. Grayscale stressed in a recent letter that the agency no longer has justification to favor futures Bitcoin ETFs over spot ETFs and should approve such a product to benefit investors.
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