Yesterday, ARK Invest and 21Shares made headlines by submitting two new Ethereum futures ETFs to the Securities and Exchange Commission (SEC). This move marks a significant development in the world of cryptocurrency investment products.
Active Ethereum Futures ETF (ARKZ)
The first of these ETFs, known as the Active Ethereum Futures ETF (ARKZ), is designed to focus exclusively on Ethereum derivatives. This means that investors in ARKZ will have exposure to the price movements of Ethereum without directly owning the cryptocurrency itself. Instead, the ETF will invest in Ethereum futures contracts.
Active Bitcoin Ethereum Strategy ETF (ARKY)
The second ETF, named the Active Bitcoin Ethereum Strategy ETF (ARKY), offers a broader approach by covering both Bitcoin and Ethereum futures. This diversification allows investors to gain exposure to the two largest cryptocurrencies by market capitalization through a single investment vehicle. Similar to ARKZ, ARKY will invest in futures contracts rather than the underlying assets.
Both of these ETFs have a common feature in that they invest in Ether futures contracts that settle in cash via the Chicago Mercantile Exchange (CME). This cash settlement mechanism is designed to simplify the investment process and reduce the complexities associated with physically settled futures contracts.
According to the filing submitted to the SEC, the Active Ethereum Futures ETF (ARKZ) plans to allocate more than a quarter of its assets to Ether Futures. This allocation reflects a strong bullish sentiment towards Ethereum’s price potential among the fund’s managers.
The remaining assets in both ARKZ and ARKY will be diversified into liquid, short-term investment avenues. These may include US Treasuries, money market instruments, and repurchase agreements. This diversification strategy aims to manage risk and provide investors with a more balanced portfolio.
This development closely follows a report from Bloomberg last week, which suggested that the SEC might be nearing approval for an Ethereum ETF that invests in futures contracts. The prospect of such ETFs has generated significant interest in the crypto community, as they offer a more accessible and regulated way for traditional investors to gain exposure to cryptocurrencies.
The month of August witnessed a flurry of activity in the cryptocurrency ETF sector. A total of 18 different Ethereum ETF applications were submitted to the SEC. These applications came from a diverse range of fund providers, including Volatility Shares, Bitwise, Roundhill, VanEck, Proshares, Grayscale, Direxion, Kelly ETFs, and Valkyrie.
Breaking down these applications, 10 out of the 18 ETFs are solely focused on Ethereum, while the remaining eight propose a combination of Bitcoin and Ethereum investment strategies. This demonstrates the growing interest in Ethereum specifically, as well as the continued appeal of Bitcoin.
Notable Approvals on the Horizon
Among the submitted ETFs, a couple stand out with expected approval dates. The Ether Strategy ETF by Volatility Shares is positioned as the first exclusive Ethereum ETF in the lineup, with an anticipated approval date of October 11.
For investors interested in both Bitcoin and Ethereum, the Direxion Bitcoin Ether Strategy ETF has the potential for approval on October 16.
Ethereum’s Current Performance
As of the time of writing, Ethereum is trading at $1,649, showing a relatively flat performance over the last 24 hours, according to CoinGecko.
The cryptocurrency market remains dynamic, and the introduction of Ethereum futures ETFs could have a notable impact on Ethereum’s price and the broader crypto market.