Ark 21Shares Ethereum ETF Now Drop Staking ETH Proposal

Key Points:

• ARK 21Shares Ethereum ETF is based on this, excluding proof of stake due to SEC concerns about its classification as a security.
• Analysts downgrade SEC approval chances from 70% to 25%, citing regulatory uncertainties surrounding Ethereum and staking.

In a recent development concerning the proposed Ethereum exchange-traded fund (ETF) by ARK Invest and 21Shares, the companies have made amendments to exclude proof of stake from the fund. The Securities and Exchange Commission (SEC) raised concerns regarding staking, considering it a security, prompting the revision.

Read more: Ethereum ETF Applications: Is There Potential For New Breakthrough?

Ark 21Shares Ethereum ETF Proposal Amended: PoS Exclusion Raises Regulatory Concerns

Initially, ARK Invest and 21Shares had included staking options for ARK 21Shares Ethereum ETF in their filing documents, but the latest amendment removed this feature. Analysts have adjusted their outlook on SEC approval, with one lowering the chance from 70% to 25%.

The SEC’s stance on staking, considering it a security, has dimmed the prospects of spot Ethereum ETF approval. SEC Chairman Gary Gensler‘s inclination to classify ETH as a security adds further uncertainty. Notably, the deadline for SEC ruling on the Ethereum ETF proposals is May 23, but industry experts anticipate rejection.

The ARK 21Shares Ethereum ETF, filed in September 2023, aims to provide investors direct access to ether on the Cboe BZX Exchange, utilizing the CME CF Ether-Dollar Reference Rate. 21Shares functions as the trust sponsor, with Delaware Trust Company as trustee and Coinbase Custody Trust Company as the ether custodian. ARK Investment Management supervises the fund.

Industry Experts Predict SEC Rejection for Ethereum ETF Proposals

Despite the revised documents hinting at discussions between the SEC and ETF applicants, the reasons for changes remain undisclosed. The revised approach underscores a strategic adjustment to enhance SEC compliance.

While ARK Invest and 21Shares have not commented on the amendments, the evolving regulatory landscape around Ethereum and staking presents challenges for ETF approval, dampening earlier optimism among industry observers.