ARK Invest, 21Shares Exclude Staking from Spot ETH ETF

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As an experienced financial analyst who has closely followed the crypto market and SEC regulations, I am deeply concerned about the latest developments regarding the proposed spot Ethereum exchange-traded funds (ETFs) from 21Shares and ARK Invest. The exclusion of the staking feature in their revised SEC S-1 documents is a significant setback for these applicants.

In the updated SEC filing for their proposed spot Ethereum exchange-traded fund, 21Shares and ARK Invest have chosen to remove the staking feature at the request of the Securities and Exchange Commission (SEC). This modification addresses the SEC’s concerns regarding staking, which categorizes the asset as a security.

Prior to this, ARK Invest and 21Shares mentioned the possibility of staking Ethereum in their prospectus. This meant that fund managers could potentially earn additional returns beyond the management fees. However, it’s essential to note that this was seen more as a trial than an officially approved practice.

As a crypto investor, I’ve come to understand that the Securities and Exchange Commission (SEC) has made it clear that staking is classified as a security. This news isn’t encouraging for the proposed spot Ethereum Exchange-Traded Funds (ETFs). The SEC is reportedly planning to intensely scrutinize prominent traders, including Peter Brandt, regarding their involvement in staking schemes.

If the crypto community expresses displeasure towards the SEC’s classification of XRP, Ethereum, and others as securities, anticipate a significant regulatory crackdown on staking by the US Commodity Futures Trading Commission, SEC, and the U.S. Treasury Department. The ensuing response could result in turbulent markets.— Peter Brandt (@PeterLBrandt) May 9, 2024

As an analyst, based on recent developments, I can infer that there might be ongoing discussions between the Securities and Exchange Commission (SEC) and the applicants of spot Ethereum Exchange-Traded Funds (ETFs), including 21Shares and ARK Funds. According to industry insiders, these applications are undergoing enhancements to align with the SEC’s regulatory standards. However, neither 21Shares nor ARK Funds have disclosed the reasons for these modifications to the general public yet.

As a researcher looking into recent developments in the world of cryptocurrency ETFs, I’ve come across an interesting update regarding Grayscale. This past week, they withdrew their proposed plans for an Ethereum futures-based exchange-traded fund (ETF). The reason behind this decision appears to be an attempt to circumvent a potential legal rejection.

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2024-05-11 02:44