ARK Invest and 21Shares, two prominent asset management firms, have taken a significant step toward introducing an exchange-traded fund (ETF) that directly holds Ethereum (ETH). This initiative marks a significant development for the cryptocurrency market, as it would be the first Ether-based ETF available in the United States. In their joint application to the US Securities and Exchange Commission (SEC), the companies are seeking regulatory approval for the Ark 21Shares Ethereum ETF, providing investors with a new way to gain exposure to the world of cryptocurrencies.
Ethereum ETF: A First for the US:
If approved, the Ark 21Shares Ethereum ETF would be a groundbreaking financial product, offering US investors direct exposure to ETH, the second most popular cryptocurrency after Bitcoin. The ETF’s proposal outlines plans to custody its Ethereum assets with Coinbase Custody Trust Company, a reputable player in the crypto custody space. Notably, the majority of the ETF’s Ether holdings will be stored in cold storage, emphasizing the commitment to security.
Market Reaction:
News of the ETF application had an immediate impact on Ether’s price, causing a significant price spike before settling at around $1,630, roughly where it had been trading earlier in the day. This reaction underscores the market’s interest in crypto-related ETFs and the potential for such products to influence digital asset prices.
Recent Grayscale Victory and SEC’s Stance:
This Ethereum ETF application follows a recent legal victory by Grayscale against the SEC concerning a Bitcoin ETF. The US Court of Appeals ruled that the SEC had exceeded its authority and acted arbitrarily by requiring a surveillance-sharing agreement, overturning the SEC’s 2022 denial of a proposed rule change to allow the listing of a Bitcoin ETF. Grayscale, a major player in the cryptocurrency investment space, has been striving to convert its closed-end GBTC fund into an ETF since 2021.
SEC’s Bitcoin ETF Decision Delayed:
In response to this legal development, Grayscale expressed its eagerness to meet with the SEC to expedite the approval process for its Bitcoin ETF. However, the SEC recently announced a delay in its decision on various spot Bitcoin ETFs, extending the review period until October 17. This delay leaves the fate of Bitcoin ETFs in the US in limbo, with uncertainty surrounding whether the regulator will oppose them or if the matter will proceed to court, similar to the Bitcoin ETF application.
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Conclusion:
The submission of an Ethereum ETF application by ARK Invest and 21Shares signifies a major step in the evolution of cryptocurrency investments in the United States. Should the ETF receive SEC approval, it would mark a significant milestone in the mainstream adoption of cryptocurrencies as legitimate investment assets. The outcome of this application, along with the ongoing developments related to Grayscale’s Bitcoin ETF, will be closely monitored by the cryptocurrency community and traditional financial markets alike, as they hold the potential to shape the future of cryptocurrency investment products in the US.
