Restructuring of 21Shares Core Ethereum ETF and Ark Invest's Departure

21Shares recently filed the third amendment for their Ethereum Exchange-Traded Fund (ETF) under the name 21Shares Core Ethereum ETF on May 31, 2024. The amended document garnered attention for the notable exclusion of its long-standing collaborator, Ark Invest.

In response to the Securities and Exchange Commission's deadline for draft S-1 submissions for ETH ETF applicants, 21Shares submitted their amended S-1 to secure final approval, signaling their intent to launch ETH ETFs. Following Vanguard, another prominent investment management company, Cathie Wood's Ark Invest, withdrew from the ETH ETF competition.

Previously, Ark Invest and 21Shares had jointly ventured into offering Exchange-Traded Funds for Bitcoin, hinting at a similar collaboration for ETH based on previous filings.

The removal of Ark Invest as a partner prompted a renaming of the instrument from Ark 21Shares Ethereum ETF to 21Shares Core Ethereum ETF.

Key Changes in the Amended S-1 Filing

The revision from Amendment 2 to Amendment 3 that stood out to industry observers was the absence of Ark Invest. Bloomberg's James Seyffart highlighted this significant alteration to his followers.

An additional noteworthy change introduced in the recent amendment was the implementation of a zero-fee structure for management fees. This approach aims to attract more investors during the initial phase, potentially transitioning to nominal management fees in the future.

Possible Motives Behind Ark Invest's Decision

Although Ark Invest and 21Shares maintain their collaboration on a Bitcoin ETF (Ark 21Shares Bitcoin ETF), the sudden move away from the ETH ETF race indicates a divergence in strategic priorities. Cathie Wood's emphasis on providing affordable investment opportunities around Bitcoin underscores her commitment to public accessibility.

One probable reason for Ark Invest's shift could be Cathie Wood's reservations regarding the premature approval of the ETH ETF, driven by political agendas rather than fundamental market dynamics. This uncertainty regarding the growth and attractiveness of the ETH ETF as an investment avenue might have influenced the decision.

The evaluation of the SEC's response to these alterations in the latest amendment will be pivotal in assessing the future trajectory of the offering.