ARK Invest Updates SEC Filing for Ethereum (ETH) ETF: A Major Move in Crypto Investment

• Investment giants ARK Invest and 21 Shares have removed Ether (ETH) staking terms from their SEC applications for spot ETH ETF launch in the U.S.
• The move comes amid increasing scrutiny from the U.S. SEC, leading to speculation about the motivations behind this decision.
• It remains unclear whether other applicants will follow suit and remove staking elements from their applications.

ARK Invest and 21 Shares have made a surprising move by removing Ether staking terms from their SEC applications for spot ETH ETF launch in the U.S. amid increasing scrutiny from the regulatory body.

ARK’s Ether ETF: ETH staking terms disappear from SEC filing

ARK Invest and 21 Shares have amended their SEC applications for spot ETH ETF launch in the U.S., removing the description of potential Ether (ETH) staking. This change was noticed by Fox Business correspondent Eleanor Terrett on May 10, 2024. Prior to this amendment, the firms had informed the SEC about plans to join ETH staking upon spot Ethereum ETF approval. They were “generally expecting” to stake a portion of ETH under management via trusted staking providers.

Implications of the Amendment

If this plan had been implemented, ETH staking rewards would have been treated as income for the trust and taxed accordingly under relevant IRS guidance. The applicants had also highlighted the risks associated with ETH staking, including the potential loss of tokens due to the “slashing” procedure in Ethereum’s PoS and the time-limited lack of access to ETH locked in staking contracts. Staking of crypto coins has been frequently targeted by U.S. regulators. For instance, the SEC had previously targeted the Kraken exchange over its staking business in 2023.

“One less thing for SEC to use in rejection”: Bloomberg’s Eric Balchunas on intriguing move

Terrett speculated on whether we should expect similar moves from other asset managers waiting for spot ETH ETF approval and the role of SEC’s comments in this process. Eric Balchunas, senior ETF analyst of Bloomberg, expressed uncertainty about the effects of such an unexpected amendment. He suggested that it could either be a strategic move based on SEC comments or an attempt to give the SEC one less reason to reject their application.

Conclusion

The decision by ARK Invest and 21 Shares to remove Ether staking terms from their SEC applications adds a new twist to the ongoing saga of crypto regulation in the U.S. It remains to be seen whether other applicants will follow suit and what impact this will have on the future of crypto staking and ETFs in the country.