- June 2, 2024
- Posted by: [email protected]
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Cathie Wood’s Ark Investment Management has withdrawn from the race to launch an exchange-traded fund (ETF) that directly invests in Ether, the second-largest cryptocurrency. An amended prospectus document, known as Form S-1, was filed with the US Securities and Exchange Commission (SEC) on Friday. This document revealed that Ark’s name was removed from the application for the spot-ether ETF initially filed in partnership with 21Shares. Consequently, the fund’s name changed from Ark 21Shares Ethereum ETF to 21Shares Core Ethereum ETF.
This move comes after Ark’s successful collaboration with 21Shares earlier this year to launch spot-Bitcoin ETFs. Despite withdrawing from the Ethereum ETF, Ark remains committed to its Bitcoin ETF, the $3.2 billion ARK 21Shares Bitcoin ETF (ticker ARKB). This fund is currently the fourth-largest Bitcoin ETF by assets, demonstrating Ark’s continued focus on Bitcoin.
The unexpected approval by the SEC of the 19b-4 filings made by exchanges operated by Cboe Global Markets Inc., Nasdaq, and the New York Stock Exchange to list spot-ether ETFs has created significant anticipation in the market. However, issuers still await the regulator’s approval of their S-1 statements before trading can commence. This regulatory approval process is crucial and can determine the timing and success of these financial products.
In response to these developments, 21Shares expressed enthusiasm about the SEC’s approval and reaffirmed their commitment to increasing access to cryptocurrencies for US investors. They also highlighted their continued partnership with Ark on the ARK 21Shares Bitcoin ETF, launched in January, as well as their existing lineup of futures products. This indicates that while Ark may have stepped back from the Ether ETF, their collaboration with 21Shares remains strong in other areas.
Several other issuers, including Franklin Templeton, Fidelity Investments, VanEck, and Invesco Ltd., have filed revised S-1 statements, signaling their intentions to launch Ether ETFs. The SEC’s decision on these documents is still pending. Meanwhile, Franklin Templeton filed an amended document detailing its proposed fund, indicating a planned fee of 0.19%, which will be waived for the first six months on the first $10 billion of the ETF’s assets. This strategic pricing could attract significant investor interest once approved.
Notably, Cathie Wood’s Bitcoin ETF recently experienced its largest one-day outflow since its launch, with nearly $100 million exiting the fund. This outflow could signal changing investor sentiments or market dynamics that Ark and other fund managers will need to navigate carefully. Bloomberg ETF analyst James Seyffart believes the approval of spot Ethereum ETFs was likely influenced by political decisions rather than purely financial considerations. In a recent interview, Seyffart suggested that the political climate, including actions by the Biden administration and responses from the crypto community, played a significant role in the approval process.
Beyond Bitcoin and Ethereum, Seyffart noted that the approval of other crypto ETFs, such as those for Solana, is unlikely without significant regulatory changes. He emphasized the need for a regulated market to monitor these assets for fraud and manipulation. This highlights the ongoing challenges of expanding crypto ETF offerings amid evolving regulatory landscapes.
In contrast, crypto investor and trader Brian Kelly has suggested that Solana could potentially become the next cryptocurrency to have a spot ETF in the United States. During a recent episode of CNBC’s ‘Fast Money,’ Kelly, founder and CEO of the BKCM Digital Asset Fund, speculated that Solana might be the next big crypto ETF, alongside Bitcoin and Ethereum. Kelly’s speculation reflects the dynamic nature of the cryptocurrency market and the potential for new players to emerge as significant investment opportunities.
The withdrawal of Ark Invest from the Ether ETF application with 21Shares marks a notable shift in the competitive landscape of cryptocurrency ETFs. As regulatory frameworks continue to evolve and market conditions change, issuers must remain agile and responsive to new developments. The potential for future ETFs, including those for cryptocurrencies like Solana, will depend heavily on regulatory approvals and market demand.
