ARK Invest Intends To Revolutionize Ethereum-ETFs

ARK Invest Intends To Revolutionize Ethereum-ETFs Using The Power Of Stacking

Investment company ARK Invest and Swiss crypto asset specialist 21Shares have proposed to the U.S. Securities and Exchange Commission (SEC) to approve the launch of an innovative financial instrument – a spot ETF (exchange-traded investment fund) based on Ethereum. The main feature of the proposed product is the use of staking to generate additional income from investments in Ethereum.

In an application dated February 7, the companies proposed a model according to which only cash will be used when creating and redeeming the fund's shares. This mechanism is similar to the one currently used in existing bitcoin-based investment instruments. This approach requires issuers to sell the fund's assets and transfer cash to the investor.

In the interest of starting a discussion on the use of staking, lawyer Scott Johnsson pointed out that the relevant paragraphs of the document were included in square brackets, which may serve as confirmation of the desire to initiate a dialogue on this topic.

The current state of the options market indicates increasing expectations for the approval of spot Ethereum ETFs in May, as stated by the head of Bitfinex derivatives department, Jag Kooner. This date corresponds to the first deadline for the SEC to make a final decision on the applications from VanEck and ARK/21Shares. Kooner also noted an increase in open interest in call options for expirations in March, April and May, however, additional indicators indicate a more cautious attitude of traders, making it possible to approve the product no earlier than 2025 or 2026.

Kooner also commented on price benchmarks in the options market, highlighting concentrated open interest in contracts with an execution price in the range of $2,400-2450 until February, while the max pain indicator (the price of the underlying asset at which option buyers will incur maximum losses) is near $2,300. For later options, the max pain price is $2,400 and the highest open interest is $2,900. In March, there is an anomaly with the price of max pain around $2000 and an open interest distributed between $2000 and $3000.

Experts express different opinions about the prospects for the approval of spot Ethereum ETFs by the SEC. Some consider it likely that the products will be approved as early as May this year, while Grayscale suggests that a decision may be made in the summer. BlackRock CEO Larry Fink sees the potential for tokenization in Ethereum ETFs, despite the postponement of decisions on applications to launch such ETFs from other companies.

SEC Commissioner Hester Pierce expressed optimism about registering an Ethereum ETF without litigation, unlike in the cases of bitcoin ETFs. However, the complexity of the situation shows that the market is still full of uncertainty about the future of cryptocurrency ETFs in the United States.