May 13, 2024 - Economy

🥩 Ark/21 Shares' Ether ETF signal

Illustration of a pixelated dollar sign popping up on a radar.

Illustration: Lindsey Bailey/Axios

A couple of possible signals recently flashed on the spot ether ETF approval radar, sparking excitement among those waiting on the SEC decision expected this month.

Why it matters: The crypto industry is looking for parallels between this application process and the previous one for spot bitcoin ETFs in an attempt to divine, and perhaps frontrun, another possible approval.

Between the lines: ARK Investment Management and 21 Shares on Friday updated their joint application for an ether ETF, dropping sections mentioning staking features from its previous application.

  • Plus, Grayscale Investments chief Michael Sonnenshein expressed optimism that the "SEC will do the right thing by investors" shortly after its application for an ether futures ETF was withdrawn. (Folks speculated: Maybe a lawsuit wouldn't be necessary this time.)

Context: In the lead-up to the January nod on spot bitcoin ETFs, there was a lot of noise around meetings between the issuers and the SEC, what the agency wanted to see and corresponding changes to applications.

  • That Ark/21 Shares dropped mentions of staking — a feature the regulator has previously expressed disapproval over — would appear to be progress toward getting more comfortable around a slate of products.
  • By the numbers: Its most recent application mentions staking 16 times, versus the 36 times it appears in its earlier application.

Reality check: Confirmed signal, or a false return, it's not certain, according to Bloomberg Intelligence analyst Eric Balchunas.

  • "While it may seem like this is them getting their docs in shape based on SEC comments (which would be good news) there hasn't been any comments," he said Friday via social media.
  • "So it's prob either a Hail Mary or maybe trying to give SEC one less thing to use in their rejection."

💭 Our thought bubble: 👆 We already know what the SEC thinks about staking per its battles with Coinbase, Kraken, and more recently, Consensys —so as issuers narrow their applications for ether ETFs, regulators may have to get more specific on comments around them.

  • That's cornering the SEC for a reason, but not necessarily, the kind of flex to force a nod.
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