Cryptocurrency ETF applications continue to pile up in the United States.
The Securities and Exchange Commission (SEC) has received a new cryptocurrency ETF application. This time, Ark Invest and 21Shares have teamed up to ask the securities regulator for approval to launch two new exchange-traded funds, or ETFs, based on Bitcoin and Ethereum futures.
Both asset management firms seek to offer their investors indirect exposure to the two main cryptocurrencies on the market.
According to the presentation In a filing with the SEC through Empowered Funds, the new futures funds, called “ARK 21Shares Active Ethereum Futures ETF” (ARKZ) and “ARK 21Shares Active Bitcoin Ethereum Strategy ETF” (ARKY), from Ark Invest and 21Shares, will allow investors to access BTC and ETH futures contracts traded on exchanges such as the Chicago Mercantile Exchange (CME), registered with the Commodity Futures Trading Commission (CFTC).
The application also indicates that, in addition to CME futures products, part of the ARKZ ETF funds will be allocated to U.S. Treasury bonds and other market investment instruments, while the ARKY ETF funds will be allocated to ETH, Bitcoin futures and securities.
What are Bitcoin and Ethereum futures?
Futures are contracts that are traded on commodity exchanges such as the Chicago Mercantile Exchange. These futures contracts, as explained by both investment firms in the application filed, are agreements between two parties and are cleared and marked through a clearinghouse. Bitcoin and Ethereum futures are cash-settled, meaning one party agrees to buy a set amount of the cryptocurrency from another party at a future time at a price agreed upon at the start of the contract.
Regarding cryptocurrencies, the investment firms detailed that Bitcoin is a decentralized, peer-to-peer and open-source network, which is not controlled or operated by any government, organization, company or person and that the value of its native cryptocurrency, BTC, depends on supply and demand in the market. They also highlighted that the network is protected by advanced cryptographic techniques that prevent counterfeiting and double spending.
Regarding Ethereum, they indicated that ETH is the native cryptocurrency of this network, which is also decentralized and open source. They noted that ETH can be used to “purchase goods and services, stored for future use, or exchanged for fiat currency” just like BTC and that it is the second largest cryptocurrency by market capitalization behind Bitcoin.
Perspectives on Ethereum Futures ETFs
With the recent futures ETF applications from Ark Invest and 21Shares, the SEC is now reviewing at least half a dozen active futures exchange-traded fund filings that were submitted this month.
Other fund management companies such as Valkyrie, Bitwise, Grayscale, Proshares and Direxion Shares are also seeking approval from the US securities regulator to launch an ETF based on Ethereum futures.
Although the approval of a Bitcoin spot ETF in the United States remains an unknown, Bloomberg analysts said in mid-August that there is a possibility that the SEC will approve one or more of the Ethereum futures ETF applications it has received so far in October.
Continue reading: SEC Could Approve 1st Ethereum Futures ETF in October, Bloomberg Says
