Last Friday, the U.S. Securities and Exchange Commission (SEC) granted a second round of approvals to eight spot-based Ethereum ETFs. However, one subtle detail came as a surprise. Swiss product issuer 21Shares will operate the Ethereum ETF without ARK Invest.
In April 2021, Cathie Woods' investment firm ARK Invest announced a partnership with Europe's leading issuer of crypto exchange-traded products (ETPs), 21Shares. Wood had previously invested in the Swiss crypto startup and sat on the board of its subsidiary, Amun. The two companies wanted to launch a spot bitcoin ETF together. ARK Invest would primarily lend its once-notorious name to the product before the crash in late 2021. Two and a half years later, the launch of the joint bitcoin ETF "ARKB" was successful, ranking third in assets under management, just behind financial heavyweights BlackRock and Fidelity. Therefore, the recent split for the already approved Ethereum ETF comes as a surprise.
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Bitcoin ETF remains a joint venture
However, customers will not notice the separation in any way, 21Shares told CVJ.CH upon request. 21Shares was already responsible for the entire fund business of the ARKB ETF, and ARK Invest remains a committed partner for all existing products in the US market. Client funds remain safe and no action is required. Only the upcoming Ethereum ETF will no longer bear the name of Cathie Wood's ARK Invest.
This ETF received initial approval from the SEC at the end of May. At that time, the product was still called the Ark 21Shares Ethereum ETF. Last Friday, when filing the updated Form S-1 document, the Swiss issuer removed the "Ark" and renamed the fund "21Shares Core Ethereum ETF". The ticker is now "CETH". There have been no changes to the product fees. It will be interesting to see how the name change affects investors. The eight Spot Ethereum ETFs are expected to have their first trading day in the coming weeks.
Reasons behind the split
ARK Invest did not provide any further details about the split in a statement. The fund company still believes in the transformative potential of Ethereum. However, ARK is leaving the ETF entirely to 21Shares. The US company will not launch its own product for the time being. Both parties are completely silent on the reason for the separation.
The announcement comes just one month after a joint event with ARK founder Cathie Wood and 21.co CEO Hany Rashwan at Kaufleuten in Zurich. On stage, the successful tech investors spoke enthusiastically about the origins of the collaboration. But the "ideal partnership" seems to have cracks. Werner Grundlehner, editor of the Swiss business media tippinpoint, speculated in his coverage of the event that ARK was primarily looking to boost sales of its European funds under the recently acquired London fund house Rize ETF (now "ARK Invest Europe"). How 21Shares fits into this strategy is unclear.
