Ark 21Shares amends spot ether ETF proposal to include staking language
The addition of the language “marks a potential milestone,” Blockworks research analyst Spencer Hughes said
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Ark 21Shares amended the S-1 for their spot ether ETF.
Among other changes, including adding a section on potential staking, Ark 21Shares also added similar language to its bitcoin ETF around cash creation.
The language around staking was added in brackets, which Van Buren general partner Scott Johnsson says means that the issuer wants to add the section, but knows that the Securities and Exchange Commission will want to hold a conversation about it.
“[The Sponsor may, from time to time, stake a portion of the Trust’s assets through one or more trusted third party staking providers (“Staking Providers”). The Sponsor generally expects to stake ether tokens from the Trust’s Cold Vault Balance. In consideration for any staking activity in which the Trust may engage, the Trust would receive certain staking rewards of ether tokens, which may be treated as income to the Trust,” the filing said.
“Staking activity comes with a risk of loss of ether tokens, including in the form of ‘slashing’ penalties. Additionally, as part of the ‘bonding’ and ‘unbonding’ processes of Ethereum staking, any staked ether tokens will be inaccessible for a period of time determined by a range of factors, resulting in certain liquidity risks that the Sponsor will manage.]”
The new language does not appear in earlier S-1s submitted by Ark 21Shares or fellow hopefuls like BlackRock.
“ARK/21Shares amendments pertaining to ETH staking marks a potential milestone for the intersection of [traditional finance] and digital assets. Currently, ~25% of total ETH supply is staked,” Blockworks research analyst Spencer Hughes said.
“ETH holdings from ETFs could result in exponential growth for the entire staking industry. Further, an increase in institutional ETH staking increases the need for distributed validator technology (DVT) development, which prioritizes validator uptime and geographical distribution,” he continued.
Bloomberg Intelligence analyst Eric Balchunas noted that the other additions to the S-1, as previously mentioned, would ensure that the ETF only includes cash creations.
Bloomberg Intelligence analyst James Seyffart previously told Blockworks that he puts the odds of approval at 60%.
Ben Strack contributed reporting.
Updated Feb. 7, 2024 at 1:02 pm ET: Clarified that language from BlackRock’s spot ether ETF proposal was amended.
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