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Post: ARK 21Shares Adopts Cash-Creation Model for Ethereum ETF, Proposes Staking to Generate Income

ARK 21Shares Adopts Cash-Creation Model for Ethereum ETF, Proposes Staking to Generate Income

Key Points:

  • ARK 21Shares has amended its spot Ethereum exchange-traded fund (ETF) application to adopt a cash-creation model, similar to its approved spot Bitcoin ETF.
  • The company has also proposed staking a portion of the ETF’s Ether to generate additional income.
  • ARK 21Shares and BlackRock were among the first issuers to convert their spot Bitcoin ETFs to a cash creation and redemption model in response to regulatory requirements.
  • Initially, ARK 21Shares proposed an in-kind redemption model for its Ether ETF, which involved non-monetary payments.

Elaborate With Insight:

ARK 21Shares has made changes to its spot Ethereum ETF application to align it with the approved spot Bitcoin ETF and meet regulatory requirements. The company has moved to a cash-creation model for its Ethereum ETF, similar to what it did for its Bitcoin ETF. This means that investors will be able to create shares of the ETF by trading cash, rather than using non-monetary assets like Bitcoin or Ethereum. Additionally, ARK 21Shares has proposed staking a portion of the ETF’s Ether holdings to generate extra income.

By adopting the cash-creation and redemption model, ARK 21Shares is complying with regulatory standards set by the U.S. securities regulator. This model simplifies the trading process of the ETF and ensures that investors can buy and sell shares with cash, which is a more conventional approach.

Initially, ARK 21Shares had planned to use an in-kind redemption model for its Ether ETF, which would involve accepting non-monetary assets such as Bitcoin. However, the company has now revised its approach to align with the cash-creation model used for its Bitcoin ETF.

Hot Take:

ARK 21Shares’ decision to amend its spot Ethereum ETF application to match its approved spot Bitcoin ETF is a strategic move to navigate the regulatory landscape effectively. By adopting a cash-creation model for both ETFs, the company can ensure compliance and provide a more streamlined and familiar trading experience for investors. The proposed staking of a portion of the ETF’s Ether holdings is a notable addition that could potentially generate additional income and attract more interest from investors. Overall, these changes position ARK 21Shares as a leading player in the ETF industry, offering exposure to two of the most prominent cryptocurrencies.

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