Ethereum ETF Plans Include Staking Feature
ARK Invest and 21Shares have opted to remove the crypto staking feature from their proposed Ethereum (ETH) exchange-traded fund (ETF), following deliberations with the U.S. Securities and Exchange Commission (SEC). This decision marks a shift towards a cash creation and redemption model, aligning with regulatory preferences.
Previously, the ETF was structured around in-kind redemptions, utilizing non-monetary assets like Ether. Under the revised approach, ARK Invest and 21Shares will purchase Ether equivalent to the order amount and deposit it with a custodian to facilitate ETF share creation.
In a filing submitted on May 10, 21Shares’ plans to stake a portion of the fund’s assets through third-party providers were removed, contrasting their earlier intention to earn ETH rewards from staking activities. This amendment mirrors adjustments made to streamline their offering in line with recently approved Bitcoin ETF frameworks.
Eric Balchunas, a Bloomberg crypto analyst, noted the update on social media, highlighting the alignment of ARK/21Shares’ Ether ETF with prevailing market standards. The revised filing retains discussions on potential risks like slashing penalties, fund inaccessibility during bonding periods, and their impact on Ethereum’s market dynamics.
Despite the promising outlook for the spot Ether ETF, regulatory delays have affected its progress. The SEC has yet to decide on proposals from major players such as Invesco Galaxy, Grayscale, Franklin Templeton, VanEck, and BlackRock. Key decisions are expected on VanEck’s application by May 23 and ARK Invest and 21Shares’ by May 24, potentially reshaping institutional interest in Ether as a tradable asset.
In contrast, Fidelity and Grayscale have incorporated staking features into their Ethereum ETF proposals, aiming to leverage regulated financial opportunities and offer investors exposure to Ethereum’s staking rewards. However, U.S. lawmakers and the SEC continue to scrutinize crypto ETFs for investor protection and regulatory risks.
The evolving landscape of crypto ETFs, exemplified by recent developments in Bitcoin ETFs, underscores the delicate balance regulators must strike between fostering market innovation and safeguarding investor interests.
