ARK Invest, in collaboration with 21Shares, has submitted applications for two new exchange-traded funds (ETFs) focusing on cryptocurrency futures, according to an initial prospectus dated August 24.
One of these ETFs will exclusively invest in Ethereum futures and carry the ticker symbol ARKZ. The other ETF, identified by the ticker symbol ARKY, will encompass both Bitcoin and Ethereum futures. These applications have been lodged with the U.S. Securities and Exchange Commission (SEC) and await approval. The primary goal of these actively managed ETFs is to achieve long-term capital appreciation.
As per the prospectus, the ARK 21Shares Active Ethereum Futures ETF (ARKZ) will allocate investments to standardized exchange-traded Ethereum futures contracts settled in U.S. dollars. These contracts, regulated by the Commodity Futures Trading Commission (CFTC), are likely to be traded on exchanges such as the Chicago Mercantile Exchange (CME). Notably, these funds will not directly invest in cryptocurrencies; instead, they will seek exposure through futures contracts.
It’s essential to recognize that these funds won’t provide direct exposure to the “spot” prices of Ethereum or Bitcoin, potentially limiting their ability to fully capture the volatility or potential gains of the underlying assets.
These investment products carry inherent risks, including factors like “contango” and “backwardation” that can impact pricing and diminish returns. The SEC’s decision on these ETF applications will be closely monitored, particularly since the regulator is preparing to approve a range of cryptocurrency ETFs.
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