The Delaware Trust Company will act as the trustee of the spot Ether ETF from Ark Invest and 21Shares, while Coinbase will act as the crypto custodian.
While the broader crypto market awaits the launch of the Ethereum futures ETF, financial players are gunning for a spot Ether ETF. On Wednesday, September 6, asset managers ARK Invest and 21Shares filed with the US Securities and Exchange Commission (SEC) for an exchange-traded fund (ETF) that would directly hold Ether (ETH).
Spot Ether ETF
This is the first-ever attempt to list the spot Ether ETF in the US market. Ark Invest said that the ETF would custody the assets with Coinbase (COIN) Custody Trust Company. The trust sponsored by 21Shares has Delaware Trust Company as its trustee. Additionally, ARK Investment Management plays a role as the sub-adviser of the trust, aiding in the marketing of the Shares.
Named the ARK 21Shares Ethereum ETF, this fund is designed to offer investors direct access to Ethereum (ETH) and will be available for trading on the Cboe BZX Exchange. It will utilize the CME CF Ether-Dollar Reference Rate – New York Variant for pricing and benchmarking.
The development hasn’t led to any movement in the price of Ethereum (ETH) which continues to trade at $1,637 with a market cap of $196 billion.
This filing arrives just ahead of the anticipated SEC approval for the inaugural futures-based Ethereum ETF, with the SEC’s decision expected by mid-October. The recent legal victory by trust issuer Grayscale against the SEC has likely emboldened the industry, leading to expectations of further crypto ETFs.
According to a report from broker Bernstein last month, a spot Ethereum ETF could be a prime contender, given its market structure similarity to Bitcoin, featuring actively traded futures and spot markets on the Chicago Mercantile Exchange (CME), a crucial regulated platform for institutional investors.
BNY Mellon to Administer the Ethereum ETF
In another 19b-4 filing submitted by Cboe on Wednesday, it was disclosed that the Bank of New York Mellon will serve as the fund’s administrator and transfer agent. This filing, akin to recent ones for proposed Bitcoin funds, also makes reference to a surveillance-sharing agreement established with Coinbase on June 21. The Cboe exchange stated:
“The Exchange and Coinbase will finalize and execute a definitive agreement that the parties expect to be executed prior to allowing trading of the Commodity-Based Trust Shares”.
With the participation of big players like BlackRock and Fidelity, spot crypto ETFs are gaining traction slowly in the market. Bitcoin and Ethereum capture the most attention being the top two cryptocurrencies by market cap. The first spot Bitcoin ETF is likely to arrive sometime around early 2024. This would open up the chances for the spot Ether ETF as well.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
