Investment firms ARK Invest and 21Shares are collaborating to apply for two Ethereum futures exchange-traded funds (ETFs). This collaborative effort comes after reports last week suggesting that the United States securities regulator might begin approving such applications. The proposed ETFs are named “ARK 21Shares Active Ethereum Futures ETF” (ARKZ) and “ARK 21Shares Active Bitcoin Ethereum Strategy ETF” (ARKY), according to a filing made on August 24th with the Securities and Exchange Commission (SEC).
The filing reveals that ARKZ will allocate a minimum of 25% of its total assets to cash-settled Ethereum futures contracts, which are commonly traded on the Chicago Mercantile Exchange (CME). On the other hand, ARKY will comprise both Bitcoin and Ethereum futures contracts.
Empowered Funds has been designated as the investment advisor for the two Ethereum products. It is worth noting that ARK Invest and 21Shares previously collaborated to launch a spot Bitcoin ETF in 2021.
However, their first two attempts to obtain approval from the SEC for a Bitcoin spot ETF were rejected in March 2022 and in January. In April, they filed their most recent Bitcoin spot ETF application, mere months before BlackRock, a $10 trillion firm, submitted its own application.
Recently, the SEC criticized several Bitcoin spot ETF applications, deeming them inadequate. This prompted ARK 21Shares and other applicants to include a surveillance sharing agreement in their applications. The investment firms are also anticipating the outcomes of their applications for Ark 21Shares Active Bitcoin Futures ETF (ARKA) and Ark 21Shares Active On-Chain Bitcoin Strategy ETF (ARKC).
The collaboration between ARK Invest and 21Shares is an interesting move in the evolving landscape of ETFs and cryptocurrency investments. With the increasing interest in cryptocurrencies like Ethereum and Bitcoin, the introduction of ETFs provides investors with a more diverse range of investment options and exposure to digital assets.
ETFs based on cryptocurrencies can present numerous benefits. They allow investors to gain exposure to the price movements of cryptocurrencies without actually owning the underlying assets. This removes the complexities associated with storage and security. Additionally, ETFs are regulated investment products, providing investors with a level of oversight and protection that may not be present in traditional cryptocurrency exchanges.
The filing made by ARK Invest and 21Shares reflects the growing popularity and acceptance of cryptocurrencies in the investment community. By seeking SEC approval for these Ethereum futures ETFs, the firms are demonstrating confidence in the potential of Ethereum as an investment asset.
Ethereum has gained significant attention for its smart contract capabilities, decentralized applications (DApps), and its role in the booming decentralized finance (DeFi) sector. With the rise of NFTs (non-fungible tokens) and the increasing demand for blockchain-based solutions, Ethereum has solidified its position as the second-largest cryptocurrency by market capitalization.
The introduction of Ethereum futures ETFs would provide investors with a more accessible and regulated way to invest in the digital asset. ETFs are typically traded on traditional stock exchanges, making them easily accessible to a wide range of investors. This increased accessibility could potentially drive more capital into the Ethereum market and further contribute to its growth and adoption.
It is worth noting that the approval process for ETFs can be lengthy and complex, with the SEC closely scrutinizing applications to ensure compliance with regulatory standards. However, the recent developments in the cryptocurrency space, including the increasing interest from institutional investors and the growing acceptance of digital assets, suggest that the SEC may be more open to approving cryptocurrency-based ETFs.
In conclusion, the collaboration between ARK Invest and 21Shares to apply for Ethereum futures ETFs reflects the increasing interest and acceptance of cryptocurrencies in the investment landscape. If approved, these ETFs could provide investors with a regulated and accessible way to invest in Ethereum, further driving its growth and adoption. However, it remains to be seen how the SEC will respond to these applications and whether they will pave the way for more cryptocurrency-based ETFs in the future.
