ARK Invest, 21Shares join queue to offer Ethereum futures ETF

August 24, 2023 Coin Telegraph

21shares

The co-filing comes just a week after reports emerged that the SEC is likely to greenlight Ethereum ETF applications.

Investment firms ARK Invest and 21Shares have teamed up to apply for two Ethereum futures exchange-traded funds after reports emerged last week that the United States securities regulator could soon begin approving applications.

The two proposed Ethereum futures ETFs are “ARK 21Shares Active Ethereum Futures ETF” (ARKZ) and the “ARK 21Shares Active Bitcoin Ethereum Strategy ETF” (ARKY), according to an Aug. 24 filing to the Securities and Exchange Commission.

The filing states that ARKZ would invest at least 25% of its total assets in cash-settled Ethereum futures contracts, such as those traded on the Chicago Mercantile Exchange (CME).

*ARK 21Share has filed two more Bitcoin/ Ethereum ETF applications to the SEC. Source: SEC.*

ARKY, on the other hand, will consist of both Bitcoin and Ethereum futures contracts.

Empowered Funds has been assigned as investment advisor for the two Ethereum products.

Ark Invest and 21Shares first partnered to launch a spot Bitcoin ETF in 2021.

The SEC knocked back its first two attempts in March 2022 and January. Its most recent Bitcoin spot ETF application was filed in April — about two months before $10 trillion firm BlackRock put in its own application.

However, the SEC recently labeled many of the Bitcoin spot ETF applications as inadequate, which prompted ARK 21Shares and other applicants to add in a surveillance sharing agreement to their applications.

The investment firms are also awaiting the outcomes of Ark 21Shares Active Bitcoin Futures ETF (ARKA) and Ark 21Shares Active On-Chain Bitcoin Strategy ETF (ARKC),

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Ark Invest

Bitcoin-related funds saw outflows of $13 million over the past week, reversing five weeks of bullish inflows, according to Coinshares analyst James Butterfill.

Bitcoin-related investment products appear to have lost some of their sheen among crypto investors, recording its first week of outflows since Blackrock filed for spot Bitcoin ETF in June.

According to a July 24 report by CoinShares’ head of research, James Butterfill, Bitcoin (BTC) investment products saw outflows of $13 million for the week ending July 21, reversing five weeks of inflows.

Short Bitcoin products also saw outflows of $5.5 million in the week.

Bitcoin Fear and Greed Index is 50 ~ Neutral
Current price: $29,178 pic.twitter.com/T1DMFpsX9p
— Bitcoin Fear and Greed Index (@BitcoinFear) July 25, 2023

In contrast, Ethereum (ETH) and XRP (XRP) investment products recorded combined inflow of $9.2 million over the last week.

Butterfill noted that Ethereum investment products were the best performer last week with inflows of $6.6 million, while XRP funds recorded an inflow of $2.6 million. Other altcoins, such as Solana (SOL) and Polygon (MATIC) tracked inflows of $1.1 million and $0.7 million respectively.

*Flows by the top digital asset investment products. Source: CoinShares.*

The apparent change of heart follows Ripple’s partial victory against the United States Securities and Exchange Commission on July 13, where the court ruled that XRP isn’t a security when sold on exchanges to the general public.

The news spiked XRP’s price up 76% to $0.83 before cooling off to $0.69 at the time of writing.

Bitcoin however still remains the dominant digital asset investment product, with $558 million in inflows so far in 2023 and a total of $25.0 billion in assets under management — amounting to 67.4% of the total market share.

BTC is currently priced at $29,128, down 3.1% over the last 24 hours.

Over the last month, a host of financial institutions have filed for Bitcoin spot Exchange Traded Fund applications with the SEC since mid-June, including BlackRock, ARK Invest, Fidelity, Galaxy Digital, VanEck, Valkyrie Investments, NYDIG, SkyBridge and WisdomTree.

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July 12, 2023 Coin Telegraph

21shares

The surveillance-sharing agreements are a measure recommended by the SEC in March, which says they can prevent fraud and protect investors.

Exchange operator Cboe Global Markets has amended five spot Bitcoin (BTC) Exchange-Traded Fund (ETF) applications to include a surveillance-sharing agreement (SSA) with Coinbase.

On July 11, Cboe amended filings with the United States Securities and Exchange Commission (SEC) for the ETFs from Invesco, VanEck, WisdomTree, Fidelity and the joint fund by ARK Invest and 21Shares.

Cboe said it had "reached an agreement on terms with Coinbase" to enter into the SSA's which were settled on June 21. The initial filings for the ETFs stated the parties were "expecting to enter" an SSA prior to potentially offering the ETFs.

The SSAs are an attempt to meet the SEC's standards aimed at preventing fraudulent conduct and protecting investors, as outlined by the regulator on March 10:

“[An exchange needs] a comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference bitcoin assets.”

Spot Bitcoin ETF applications have been a focus point for the industry lately. The filings by Fidelity, Invesco, Wisdom Tree and Valkyrie follow the $10 trillion asset management firm BlackRock which also filed an ETF for SEC approval.

On June 29, the U.S. stock exchange Nasdaq also refiled its application to list BlackRock's ETF, similarly inclusive of an SSA with Coinbase.

Cboe's filings pushed Coinbase (COIN) shares up nearly 10% on June 11, the highest price it's reached since August 16, according to Google Finance.

*Coinbase’s share price jumped nearly 10% with the latest SSA-related filing amendments. Source: Google Finance*

Despite the involvement with Bitcoin ETF applications, Coinbase is currently battling out a lawsuit with the SEC for allegedly offering cryptocurrencies the regulator considers to be unregistered securities.

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