Recently, ARK Invest and 21Shares made significant modifications to their planned Ethereum exchange-traded fund (ETF). They decided to get rid of the staking feature from the structure of the fund. The choice, which was made after talking with U.S. securities officials, is a big move toward a model of creating cash and redeeming it.
The decision is different from the in-kind redemption plan that was being thought about before. That model involved non-monetary payments like Ether. As part of the new cash-creation model, ARK Invest and 21Shares will buy the amount of Ether needed for the order and place it with the custodian. This will make it easier to create ETF shares.
Etherereum Filing Aligns With Regulators
The choice was shown in a filing made on May 10 that took out the part that said 21Shares planned to stake some of the fund’s assets through third-party providers, which was included in a filing made on February 7. A crypto expert at Bloomberg named Eric Balchunas said on social media that the move was similar to recent changes that were made to meet the requirements of approved Bitcoin ETF prospectuses.
Even with the change, the file still talks about greater concerns like possible risks like lowering fines and temporarily not being able to access funds and how they might affect Ethereum’s price.
This change in approach brings the ETH ETF more in line with what regulators want, making it more like the structure of Bitcoin ETFs that are already legal. But the Securities and Exchange Commission (SEC) has been taking too long to make decisions on several Ethereum ETF plans, including those from BlackRock, Franklin Templeton, Grayscale, and other significant players in the industry.
The SEC has to make important decisions on these plans soon, including the ones from ARK Invest and 21Shares that are still being considered. These decisions are due on May 24. These choices will have significant implications on how institutions participate and how widely Ethereum is accepted as a financial asset.
Fidelity and Grayscale, on the other hand, have added staking features to their ETH ETFs in order to take advantage of income chances in regulated finance while also giving investors access to Ethereum’s staking rewards.
But U.S. politicians and the SEC are still looking closely at crypto ETFs because they pose risks to investors. This makes it hard to find a balance between the benefits of staking and the need to protect investors and follow the rules.
