Cathie Wood’s Ark Investment Management has decided to withdraw its involvement in launching an exchange-traded fund (ETF) that would directly invest in Ethereum, the second-largest cryptocurrency. The amended prospectus revealed that Ark’s name was removed from the application for the spot-Ether ETF filed in partnership with 21Shares. As a result, the fund’s name was changed to 21Shares Core Ethereum ETF, and Ark remains focused on its Bitcoin ETF. The $3.2 billion ARK 21Shares Bitcoin ETF currently holds the fourth position in terms of assets among Bitcoin ETFs, despite the withdrawal from the Ethereum ETF.
Ark’s decision to withdraw from the Ethereum ETF comes after the SEC approved the 19b-4 filings made by exchanges to list spot-Ether ETFs, creating anticipation in the market. Although issuers are still awaiting approval of their S-1 statements before trading can start. 21Shares responded to the SEC’s approval with enthusiasm and expressed their commitment to providing access to cryptocurrencies for US investors. They also mentioned their partnership with Ark on the ARK 21Shares Bitcoin ETF launched earlier this year, as well as their lineup of futures products. Other issuers like Franklin Templeton, Fidelity Investments, VanEck, and Invesco Ltd. have also filed revised S-1 statements but are awaiting the SEC’s decision.
Bloomberg ETF analyst James Seyffart believes that the approval of spot Ethereum ETFs may have been influenced by political decisions rather than purely financial considerations. In a recent interview, Seyffart suggested that actions by the Biden administration and responses from the crypto community played a significant role in the approval process. He also mentioned that the approval of other crypto ETFs, such as Solana, is unlikely without regulatory changes. On the other hand, crypto investor Brian Kelly has highlighted Solana as a potential candidate for the next cryptocurrency to have a spot ETF in the US. Kelly, who is the founder and CEO of the BKCM Digital Asset Fund, believes that Solana could be one of the big three cryptocurrencies for this cycle, alongside Bitcoin and Ethereum.
Several other issuers, including Franklin Templeton, have filed amended documents with details of their proposed ETFs, indicating a planned fee of 0.19% that will be waived for the first six months on the first $10 billion of the ETF’s assets. Despite the approval of spot Ethereum ETFs and the anticipation in the market, the SEC’s decision on the S-1 statements from various issuers is yet to be determined. Meanwhile, Wood’s Bitcoin ETF experienced its largest one-day outflow since its launch earlier this year, with nearly $100 million exiting the fund. The unexpected approval of spot Ethereum ETFs by the SEC has created excitement in the market, but the future of cryptocurrency ETFs remains uncertain as regulatory changes and political decisions continue to play a significant role in their approval process.
In conclusion, the recent developments in the cryptocurrency ETF space, particularly the approval of spot Ethereum ETFs and the withdrawal of Ark from the Ethereum fund, highlight the regulatory challenges and political considerations that impact the launch of crypto-focused investment products. As issuers await the SEC’s decision on their S-1 statements, the future of crypto ETFs in the US remains uncertain, with potential candidates like Solana emerging as the next cryptocurrency to have a spot ETF. Despite the approval of spot Ethereum ETFs, regulatory changes are needed to monitor these assets for fraud and manipulation, in order for other cryptocurrencies to receive approval for ETFs in the future. The approval of crypto ETFs remains a complex and evolving process, influenced by both financial and political factors that continue to shape the landscape of cryptocurrency investments in the US market.
