According to a recent regulatory filing, a proposed Ethereum exchange-traded fund (ETF) by Cathie Wood’s ARK Invest and 21Shares will only allow for cash to be delivered in the creation and redemption process.
This means that authorized participants will only be able to receive cash when redeeming shares and will only be able to deliver cash when creating shares.
This decision aligns with the Securities and Exchange Commission’s preference for a cash model, where assets are sold immediately and the cash is then given back to investors.
This differs from an in-kind model, where the manager has more flexibility in managing the portfolio, which was preferred by some other firms (such as BlackRock) during their process of getting approval for their own spot Bitcoin ETF.
Bloomberg Intelligence analyst Eric Balchunas also noted the change in the ARK/21Shares Ethereum ETF, mentioning that this brings it in line with the recently approved spot Bitcoin ETF prospectus.
