Ark Invest abandons partnership with 21Shares for proposed Ethereum ETF fund
3 min readCathie Wood ‘s Ark Investment Management has withdrawn its involvement in the race to launch an exchange-traded fund (ETF) that would invest directly in Ether, the second-largest cryptocurrency.
The amended prospectus document is known as Form S-1. It was filed with the US Securities and Exchange Commission (SEC) on Friday, revealing that Ark’s name had been removed from the application for the spot Ether ETF, which had been filed in partnership with 21Shares.
Consequently, the name of the fund ended up changing, changing from Ark 21Shares Ethereum ETF to 21Shares Core Ethereum ETF.
Ark Invest remains committed to Bitcoin fund
The move comes after Ark joined forces with 21Shares. The partnership, in fact, placed it as one of the successful issuers that launched spot Bitcoin ETFs earlier this year.
Despite the withdrawal of the Ethereum ETF, Ark remains committed to its Bitcoin ETF, the ARK 21Shares Bitcoin ETF (ticker ARKB). In fact, the fund currently ranks fourth in terms of assets among Bitcoin ETFs, with a value of US$3.2 billion under management.
The SEC’s unexpected approval of 19b-4 filings by broker-dealers operated by Cboe Global Markets Inc., Nasdaq and the New York Stock Exchange to list spot Ether ETFs has created anticipation in the market.
However, issuers are still awaiting regulator approval of their S-1 statements before trading can begin.
In response to recent developments, 21Shares in turn expressed excitement about the SEC’s approval. Additionally, it reaffirmed its commitment to increasing access to cryptocurrencies as an asset class for US investors.
They also highlighted their ongoing partnership with Ark on the ARK 21Shares Bitcoin ETF, which launched in January, as well as their existing lineup of futures products.
Notably, Wood’s firm’s Bitcoin ETF experienced its largest single-day outflow since its launch earlier this year. That’s because almost US$100 million left the fund.
Other managers review Ethereum ETF applications
Several other issuers, including Franklin Templeton, Fidelity Investments, VanEck and Invesco Ltd., have filed revised S-1 statements, signaling their intentions to launch Ether ETFs. However, the SEC’s decision on these documents has not yet been determined.
Meanwhile, Franklin Templeton has filed an amended document detailing its proposed fund. In it, the manager indicates a planned rate of 0.19%, which will be waived during the first six months on the first US$ 10.0 billion of ETF assets.
Approval of the Ethereum ETF was political
Bloomberg ETF analyst James Seyffart believes that the approval of spot Ethereum ETFs likely developed under the influence of political decisions. In other words, it was not due to purely financial considerations, as it should have been.
In a recent interview, Seyffart suggested that the political climate, including the Biden administration ‘s actions and responses from the crypto community, played a significant role in the approval.
In addition to Bitcoin and Ethereum, approval of other crypto ETFs, including Solana, is unlikely without significant regulatory changes, Seyffart said.
He noted that a regulated market is needed to monitor these assets for fraud and manipulation.
In contrast, crypto investor and trader Brian Kelly suggested that Solana could potentially become the next cryptocurrency to have a spot ETF in the United States.
On a recent episode of CNBC’s ‘Fast Money’, Kelly, who is also the founder and CEO of BKCM Digital Asset Fund, hypothesized: “The question now is: who will be next?” He then suggested:
“You need to think about Solana as probably next. Bitcoin, Ethereum and Solana are probably the big three of this cycle.”
