Ark Invest and 21shares have revised their proposal for a spot ethereum exchange-traded fund (ETF), removing previously included options for staking. This change marks a significant pivot from their earlier filings, which had contemplated engaging trusted staking providers to manage part of the trust’s assets.

Ark Invest and 21shares Modify Ethereum ETF Proposal, Omit Staking Options

The initial proposal by Ark Invest, led by prominent investor Cathie Wood, and 21shares had outlined a plan where the trust could engage in staking—leveraging assets to support network operations and earn rewards. Staking, a common practice in the operation of blockchain networks like Ethereum, allows participants to earn rewards, typically in the form of cryptocurrency, for validating transactions and supporting the network’s security.

This strategic shift away from staking components highlights a cautious approach, potentially aiming to align with regulatory perspectives. Notably, Fidelity’s ETH-based ETF was the first to propose such an inclusion of staking in its structure, setting a precedent in the ETF landscape. The decision by Ark Invest and 21shares to exclude staking in their latest filing could influence how other funds design their strategies amidst evolving regulations and market conditions.

Bloomberg’s lead ETF analyst, Eric Balchunas, described the adjustment as potentially a “hail mary.” “Hmmmm. Interesting. While it may seem like this is them getting their docs in shape based on SEC comments (which would be good news) there hasn’t been any comments. So it’s prob either a Hail Mary or maybe trying to give SEC one less thing to use in their rejection. Not sure (yet),” Balchunas wrote.

Source : Bitcoin News / May 12, 2024