ARK Invest and 21Shares Remove Staking from Ethereum ETF Application

On May 10, ARK Invest and 21Shares submitted an updated application for a spot Ethereum-ETF, which no longer includes a staking provision.

In documents dated February 7, the companies had indicated their intention to utilise coin locking to enhance the fund’s yield:

“The issuer may periodically place a portion of the Trust’s assets through one or more reliable providers.”

This provision is absent in the new application. However, it still addresses broader staking issues, including losses due to slashing (penalties), temporary unavailability of funds during locking and withdrawal, and potential impacts on Ethereum’s price.

According to Bloomberg ETF analyst Eric Balchunas, this move might indicate an attempt to “tidy up the documents” based on comments from the U.S. Securities and Exchange Commission (SEC), despite the lack of official statements.

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 its prob either a Hail Mary or maybe trying to give SEC one less thing to use in their rejection. Not sure (yet) https://t.co/CeQwj5ktPn

— Eric Balchunas (@EricBalchunas) May 10, 2024

On the other hand, he suggested that the issuers might be preemptively removing elements that could potentially displease the SEC.

The SEC’s deadline for a decision on VanEck’s spot Ethereum-ETF is set for May 23, while the deadline for ARK and 21Shares’ application is May 24.

In April, the agency postponed its decision on Franklin Templeton’s product, extending the deadline to June 11, and later rescheduled the review of Invesco and Galaxy’s instrument to July 5.

All ETFs on Blockchain

Franklin Templeton CEO Jenny Johnson told Bloomberg that she is “a big fan of blockchain and this technology.”

Johnson described the company’s experiment with account processing using both traditional methods and distributed ledger technology over six to eight months. She was surprised by “how much cheaper it was to run [the process] on blockchain.”

“It’s a very efficient technology. It will open up a lot of new investment opportunities. And, quite frankly, I think eventually all ETFs and mutual funds will be on blockchain,” she added.

The Franklin Templeton head explained her forecast by citing the “huge costs” associated with data verification across disparate storage systems.

Johnson also highlighted the need for repeated information analysis by financial institutions. In her view, “with blockchain, there is only one source of truth.”

She believes that saving time and money will help diversify investment opportunities.

In May, Grayscale Investments withdrew its application for an Ethereum futures ETF. According to CEO Michael Sonnenshein, the company will focus its efforts on converting the ETHE into a spot exchange-traded fund.