In a recent podcast interview with the Wall Street Journal’s “Take On the Week,” Cathie Wood, the founder of ARK Investment Management, expressed skepticism about the Securities and Exchange Commission’s (SEC) willingness to approve spot exchange-traded funds (ETFs) for cryptocurrencies other than Bitcoin and Ethereum. This sentiment comes amid a flurry of filings by various asset management firms seeking approval for their crypto ETFs, highlighting the growing interest in cryptocurrency investments.
Franklin Templeton in the Ethereum ETF arena
Following this skepticism, Franklin Templeton made headlines with its filing to the SEC for launching a spot Ethereum ETF, named the “Franklin Ethereum ETF,” to be listed on the Chicago Board Options Exchange, Cryptopolitan reported. However, this move by Franklin Templeton, an asset manager with $1.5 trillion under management, underscores the industry’s optimism about Ethereum’s potential despite regulatory uncertainties. The filing mentioned plans to stake a portion of the ETF’s Ethereum for additional income, a strategy that echoes ARK 21Shares’ recent applications. Franklin Templeton joins a list of notable firms, including BlackRock, Fidelity, and Grayscale, all vying for a piece of the crypto ETF market.
Despite the enthusiasm, the SEC has yet to approve any spot Ethereum ETFs, with decisions on applications from Grayscale and BlackRock, among others, being postponed. These delays highlight the regulatory hurdles facing the broader acceptance of cryptocurrencies in traditional investment vehicles.
Market dynamics and regulatory hurdles
The crypto ETF market has seen significant activity, with several firms launching spot Bitcoin ETFs in January 2024. Among these, Franklin Templeton’s Bitcoin ETF has struggled to attract investment, amassing only $77 million by early February, in stark contrast to the iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund, which have seen substantial inflows.
In collaboration with crypto asset manager 21Shares, Cathie Wood’s ARK Investment Management is among the contenders looking to launch the first U.S. ETF holding Ether. SEC Chair Gary Gensler’s classification of Bitcoin as a commodity has been clear, but his stance on Ethereum remains less defined. The potential approval of a spot some analysts see Ether ETF as a gateway for ETFs holding other digital tokens, despite the SEC’s cautious approach thus far.
