ARK Invest and 21Shares Submit Joint Application For Ethereum Futures ETF
Two prominent investment companies, ARK Invest, and 21Shares, have reportedly collaborated to seek approval to offer Ethereum futures exchange-traded funds. Their co-filing follows recent reports indicating that the US Securities and Exchange Commission (SEC) may be ready to approve such applications soon.
An Ethereum Futures ETF Partnership
ARK Invest, a well-known investment company, has decided to capitalize on the growing interest in crypto-based ETFs, particularly Ethereum. In collaboration with 21Shares, the company hopes to introduce innovative investment vehicles that will expose investors to Ethereum futures through the convenience of exchange-traded funds.
This move demonstrates the growing mainstream acceptance of cryptocurrencies as alternative investment assets. Moreover, this decision to apply for two Ethereum futures exchange-traded funds reflects its commitment to providing investors with various ways to participate in the emerging digital asset market.
With its technological advancements and widespread adoption, Ethereum has attracted the interest of several traditional investor communities. Hence, any Ethereum-based futures investment products could cater to investors with various risk appetites.
The details of this project were revealed in an official filing with the regulator in an August 24 press release. The disclosure also highlights the groundwork by these partners in believing that this investment vehicle could connect the traditional finance world with the volatile crypto market.
According to this filing, ARKZ intends to inject 25% of its assets into Ethereum futures products. It is worth noting that these are cash-settled contracts that are closely linked to prominent financial platforms such as the Chicago Mercantile Exchange (CME).
The filing also revealed that Empowered Funds is the investment advisor for this Ethereum-based ETF.
SEC’s Previous Stance
ARK Invest and 21Shares have been navigating the complex regulatory landscape in launching Ethereum futures ETFs for some time. Their journey is similar to their previous experiences with Bitcoin ETF applications, which the US regulator has rejected numerous times.
The SEC rejected ARK Invest’s initial filing for a Bitcoin spot ETF in March 2022 and January 2023. However, the firm also filed another Bitcoin spot ETF application in April, weeks before global investment behemoth BlackRock submitted its application.
The SEC’s response to the increased Bitcoin spot ETF applications is far from positive. The regulator stated its disappointment with the quality of various Bitcoin spot ETF filings, deeming them unsuitable for approval.
This call for improvement prompted ARK, 21Shares, and other applicants to incorporate a critical component into their applications: a surveillance-sharing agreement. This move includes a commitment to work with regulators to provide real-time data and insights about the underlying crypto assets, like Bitcoin and Ethereum.
By including this component, ETF applicants hope to address the SEC’s concerns while demonstrating their commitment to transparency and regulatory compliance. This turn of events highlights the delicate situation between financial innovation and regulatory scrutiny.
The push for crypto-based investment products is made challenging by regulators’ concerns about market manipulation, investor protection, and overall market stability.
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