According to Blockworks, Ark 21Shares has amended the S-1 for their spot ether ETF, adding a section on potential staking and similar language to its bitcoin ETF around cash creation. Van Buren general partner Scott Johnsson suggests that the issuer wants to add the section but expects the Securities and Exchange Commission (SEC) to hold a conversation about it. The filing states that the sponsor may stake a portion of the trust's assets through trusted third-party staking providers and receive staking rewards of ether tokens, which may be treated as income to the trust.
Staking activity comes with a risk of loss of ether tokens, including 'slashing' penalties, and certain liquidity risks due to the 'bonding' and 'unbonding' processes of Ethereum staking. The new language does not appear in earlier S-1s submitted by Ark 21Shares or fellow hopefuls like BlackRock. Blockworks research analyst Spencer Hughes believes that the amendments pertaining to ETH staking mark a potential milestone for the intersection of traditional finance and digital assets.
Currently, around 25% of the total ETH supply is staked, and ETF holdings could result in exponential growth for the entire staking industry. An increase in institutional ETH staking would also increase the need for distributed validator technology (DVT) development. Bloomberg Intelligence analyst Eric Balchunas noted that the other additions to the S-1 would ensure that the ETF only includes cash creations. The SEC will decide on the spot ether ETFs in May, but there is no consensus on whether the decision will be positive. Bloomberg Intelligence analyst James Seyffart previously told Blockworks that he puts the odds of approval at 60%.
