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21Shares is overhauling its US ETF line, and it’s out with the old, in with the yet-to-be-approved-by-the-SEC.
The company is scrapping three of its five exchange-traded funds, according to a regulatory filing made on Monday. All three of those products are relatively small and come from the partnership 21Shares has had with ARK Invest. Meanwhile, 21Shares has been prepping more than half a dozen spot-price ETFs focused on other types of cryptocurrency.
“The writing was sort of on the wall for this relationship after ARK decided not to partner with 21Shares for their Ethereum ETF,” said Bryan Armour, director of ETF and passive strategies at Morningstar.
21Shares did not comment on the direction the firm is taking. The three ETFs being liquidated are the $12 million ARK 21Shares Active Bitcoin Futures Strategy (ARKA), $13 million Active Ethereum Futures Strategy (ARKZ) and $11 million Blockchain and Digital Economy Innovation ETF (ARKD). Its remaining ETFs will be the $4.8 billion ARK 21Shares Bitcoin ETF (ARKB) and $35 million 21Shares Ethereum ETF (TETH). While there was some demand industrywide for crypto futures ETFs prior to the approvals for spot Bitcoin and spot Ethereum, that has since eroded. “They’re just a suboptimal product now,” Armour said. “There are just better ways to access [crypto].”
However, the company has sought approval from the Securities and Exchange Commission for a range of crypto ETFs, including:
Let’s See What Ya Got: The SEC under Chairman Paul Atkins has started moving more quickly toward approving crypto ETFs. Last week, the regulator issued a rare statement with the CFTC that encouraged ETF issuers to file for spot crypto funds. 21Shares hasn’t been reluctant to do that, taking a path to build out products that aren’t cobranded with ARK. “It seems like they’re focused on building their own brand in cryptocurrencies,” Armour said.
