Cathie Wood’s ARK and VanEck apply for first U.S. Ethereum spot ETF

Investment managers are as bullish on the ether spot ETF as they are on bitcoin.

Cathie Wood’s asset management firm ARK Invest has filed for the first U.S. spot ETF for ethereum (ETH), weeks after regulators shelved the company’s Bitcoin ETF application.

Investment manager VanEck filed a similar 19b-4 filing, kicking off the time when regulators must approve or reject each submission.

Ark’s Ethereum ETF Promotion

In an S-1 filed with the U.S. Securities and Exchange Commission (SEC) on Wednesday, the ARK21Shares Ethereum ETF will "track the performance of Ethereum" by holding ETH to support the value of its shares.

The trust’s custodian is Coinbase Custody, which serves other major fund providers such as Grayscale and BlackRock. It also proposed entering into an oversight-sharing agreement with Coinbase, as proposed in its Bitcoin spot ETF application.

The announcement spurred a brief rise in the price of Bitcoin (BTC) and ETH to $25,900 and $1,655, but both assets quickly returned to their pre-announcement values.

“Shareholders of the Trust will not benefit from the protections provided to investors in Ethereum futures contracts on regulated futures markets,” the filing reads.

In the case of Bitcoin, the SEC has historically shown a strong preference for futures ETFs and continues to block the approval of spot ETFs. Gary Gensler, chairman of the agency, believes that CME Group's futures market provides investor protection that the spot market cannot meet.

The committee has yet to approve any Ethereum ETF, with potential applicants hesitant because of the asset's greater price volatility and regulatory uncertainty compared to Bitcoin.

However, recent developments have prompted fund managers to file a flood of Bitcoin spot ETF and Ethereum futures ETF applications with the SEC. Some reports indicate that the latter set of filings were triggered by the SEC’s approval of a leveraged Bitcoin futures ETF in June, which was heavily criticized by the crypto industry.

**When will the Ethereum ETF be launched? **

Bloomberg ETF analyst James Seyffart estimates May 23, 2024, as the final deadline for the SEC to approve the applications for Ark and VanEck. This is roughly in line with the deadline forecast for multiple bitcoin spot ETF applicants, which is between March 15 and March 19.

Approval will largely depend on how the SEC responds to Grayscale’s spot Bitcoin ETF bid after the company lost in court. Grayscale emphasized to the agency in a recent letter that it no longer has reason to prefer futures Bitcoin ETFs over spot ETFs and that it should approve such products to benefit investors.