ARK Invest modifies Ethereum spot ETF application and removes staking functionality

In recent months, pledges have come under increasing scrutiny from the U.S. Securities and Exchange Commission (SEC).

ARK Invest and 21Shares have amended their proposed Form S-1 for a spot ethereum exchange-traded fund (ETF) and removed the staking component, according to a May 10 filing.

In February, ARK Invest and 21Shares updated their documentation to introduce the option to stake Ethereum in addition to a cash-only redemption option. This staking method is seen as an excellent way for fund managers to earn income from the large amounts of cryptocurrencies controlled by their ETFs, rather than just profiting from management fees.

Nonetheless, experts suggested at the time that ARK Invest’s proposal for Ethereum staking was more of an “exploratory” move to test the attitude of the U.S. Securities and Exchange Commission (SEC), and was not motivated by concerns that the proposal would receive securities regulation. Firm anticipation of agency approval.

The U.S. Securities and Exchange Commission (SEC) has indicated that staking activity may cause the underlying assets to be considered securities, which is a disadvantage for spot Ethereum ETFs that aim to avoid such asset characterization. Just last year, the SEC fined Kraken and forced it to terminate its staking services.

Veteran legendary trader Peter Brandt said in a recent X post that the SEC is about to crack down on staking activities.

ARK Invest’s recent revisions to its application documents have added to speculation about ongoing discussions between the SEC and spot Ethereum ETF applicants, suggesting that the application content may be adjusting to the SEC’s preferences.

The reasons for ARK Invest’s recent changes to its application have not yet been publicly disclosed, as the parties involved have not released any official statement.

Cryptocurrency analysts generally believe that May will be extremely critical for the future development of spot Ethereum ETFs. The U.S. Securities and Exchange Commission (SEC) will make an important decision this month on the future direction of these ETFs. Specifically, the SEC will make a ruling on VanEck’s application documents before May 23. At present, the general consensus among analysts is that the application is more likely to be rejected.

Earlier this week, Grayscale, a leading global digital asset manager, withdrew its application for an Ethereum futures ETF, possibly to avoid a legal liability challenge in the event of an SEC rejection.

Recently, Grayscale, the world's leading digital asset manager, withdrew its application for an Ethereum futures exchange-traded fund (ETF). This move may be to avoid the company's consequences if the U.S. Securities and Exchange Commission (SEC) does not approve it. Legal challenges and responsibilities faced independently.

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