Ark Invest and 21 Shares Drop Staking Plans in Updated Ethereum ETF Proposal

Ark Invest and 21 Shares have made a significant change to their spot Ethereum ETF proposal, dropping plans for staking in their updated filing on May 10. The firms had previously included a clause in their Feb. 7 filing that outlined their intention to stake a portion of the fund’s assets through third-party providers.

This decision means that 21 Shares will no longer receive ETH as a staking reward and will not treat earnings as income generated from the fund. The firms cited risks associated with staking, such as potential losses from slashing penalties and inaccessible funds during bonding and unbonding, as reasons for removing the staking section from their proposal.

Bloomberg ETF analyst Erich Balchunas suggested that this change could be an attempt to address SEC comments or provide less information for the agency to base a rejection upon. The SEC is expected to make a decision on various spot Ethereum proposals, including those from VanEck, Ark, and 21 Shares, within the next two weeks.

Expectations for approval are low, with Polymarket odds suggesting only a 10% chance that spot Ethereum ETFs will gain approval by the end of the month. Competing applications from Franklin Templeton, Fidelity, and Grayscale also include proposals around ETH staking, indicating a growing interest in this aspect of the market.

Overall, the decision to drop staking plans in their updated proposal could have significant implications for Ark Invest and 21 Shares as they await the SEC’s decision on their spot Ethereum ETF.