Ethereum pumps after Ark Invest and 21Shares’ spot Ethereum ETF application revisions

• ETH price soars after Ark Invest and 21Shares ETF revisions.
• The amendment aligns the spot ETH ETF with a similar cash creation and redemption model as the spot Bitcoin ETF.
• The introduction of ETH staking in the revised filing remains uncertain pending regulatory approval.

Ethereum (ETH), the native token of Ethereum, surged in price following the news of a revision to the application of Ark Invest and 21Shares’ joint spot Ethereum exchange-traded fund (ETF), reaching $2,457, and is currently at $2,424. recovered in dollars.

This news was another positive development for the Ethereum ecosystem after the Dencun upgrade was successfully deployed on the Holesky testnet.

Amendment for application of Ethereum ETF

Ark Invest and 21Shares have filed amendments to their joint application for a spot Ethereum ETF, signaling a significant update to their approach.

The revised S-1 filing introduces a cash generation and redemption policy that mirrors the structure of the recently approved spot Bitcoin ETF. The adjustment aims to streamline the creation process by limiting authorized participants to cash creation and redemption, excluding spot transactions involving ETH.

This move is consistent with regulatory expectations and operational efficiency, and reflects the SEC’s preference for cash-based methods, as seen in its approval of a spot Bitcoin ETF.

The revised file also introduces the possibility of Ethereum staking, with plans to stake ether tokens in the Trust’s Cold Vault Balance. Staking potentially carries the risk of loss, but can generate rewards that are considered profits. However, there is uncertainty as to whether the final offer will include staking, as indicated in parentheses in the filing. Bloomberg ETF analyst James Seyffart remains skeptical and suggests the SEC may not allow staking for spot Ethereum ETFs.

Market reaction and expectations

The news that Ark Invest and 21Shares are revising their spot Ethereum ETF applications has drawn mixed reactions from investors and industry observers. While this marks a positive development for the spot Ethereum ETF, expectations for approval vary.

As the SEC’s deadline for a decision on a spot Ethereum ETF approaches on May 23, analysts have differing predictions. Polymarket reported a 43% chance of approval in May, while Seyffart suggested a 60% chance. Standard Chartered Bank is very positive about approval in May, contrary to TD Cowen’s prediction that there would be no approval in 2024.

Despite the uncertainty surrounding regulatory approval, the surge in Ethereum’s price signals investor optimism and interest in the potential launch of a spot Ethereum ETF. Stakeholders are eagerly awaiting further developments in the ETH ETF space, closely monitoring regulatory decisions and industry dynamics.