ARK Invest and 21Shares Pursue New Crypto ETFs Amid SEC Reviews

ARK Invest and 21Shares ETF Proposals

ARK Invest and 21Shares have teamed up to propose two innovative futures exchange-traded funds (ETFs) for cryptocurrencies, focusing on ether (ETH) and bitcoin (BTC). These applications, submitted to the Securities and Exchange Commission (SEC) by Empowered Funds, aim to introduce the ARK 21Shares Active Ethereum Futures ETF (ARKZ) and the ARK 21Shares Active Bitcoin Ethereum Strategy ETF (ARKY).

Investment Strategy and Allocation

The proposed ETFs will emphasize cash-settled futures contracts rather than direct investments in digital assets. ARKZ plans to allocate at least 25% of its investments to Ethereum futures products, complementing this with U.S. Treasuries, money market instruments, and repurchase agreements. Similarly, ARKY will invest at least 25% in both ether and bitcoin futures, with the remainder focused on cash and cash equivalents, primarily U.S. government securities.

SEC Reviews and Market Context

This move aligns with recent reports suggesting the SEC may approve Ether-Futures ETFs by October. ARK Invest and 21Shares are part of a competitive landscape, with six other firms, including Valkyrie and Grayscale, also seeking approval for similar products. Despite facing initial rejections for spot Bitcoin ETFs, ARK Invest and 21Shares remain persistent. Their recent Bitcoin spot ETF application was submitted amidst a surge of interest, highlighted by BlackRock's entry into the market.

Challenges and Outlook

Bitcoin ETFs have encountered significant approval challenges from the SEC, prompting ARK 21Shares to incorporate surveillance-sharing agreements into their applications. The investment community is keenly awaiting the SEC's decision on these futures ETFs, which could set a precedent for future cryptocurrency investment products, potentially reshaping the industry landscape.