Cathie Wood’s ARK Invest And 21Shares Amend Ethereum ETF Filing To Make It Cash Only

Ark Invest and 21Shares amended their Ethereum ETF (exchange-traded fund) filing to give it a cash-only create and redemption mechanism.

“Authorized Participants will deliver only cash to create shares and will receive only cash when redeeming Shares,” said the updated filing with the US Securities and Exchange Commission (SEC).

HERE WE GO AGAIN: ARK/21Shares has just filed an amended S-1 for their spot Ether ETF, looks like they updated to be only cash creations and some other things that bring it in line w the recently approved spot btc etf prospectus.. pic.twitter.com/clN2oZmA6I

— Eric Balchunas (@EricBalchunas) February 7, 2024

In the initial filing, Ark Invest and 21Shares proposed an in-kind redemption model for the ETF that would have involved redemptions in assets like Bitcoin.

The amended filing has triggered slight gains for Ether. The second-largest crypto by market cap is up 2.7% in the last 24 hours to trade at $2,427 at 07:05 EST.

SEC Favors Cash Creation Models

The SEC favor cash models as seen in the filings for spot Bitcoin ETFs that were approved last month.

The cash creates model mandates ETF issuers to sell held assets to reimburse investors in cash. If the Ether ETF is approved, ARK 21Shares will have to buy ETH equivalent to the order amount before depositing it into the trust’s account with a custodian.

ARK 21Shares Introduces Staking

The updated filing also has a provision that talks about staking Ether (ETH) using at least one trusted third-party staking provider. This provision could see the fund locking up holdings to generate rewards.

The provision has excited the crypto community, with some saying the offering will appeal to the traditional finance sector.

All the TradFi people are going to absolutely salivate over the real yield that a staked spot ETH ETF can offer

You don't own enough ETH

— sassal.eth/acc 🦇🔊 (@sassal0x) November 10, 2023

But ARK 21Shares pointed out risks from staking activities that include losses and assets being locked up for a long period.

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