coinbaseA leading cryptocurrency company has urged the U.S. Securities and Exchange Commission (SEC) to approve Grayscale’s proposed spot Ethereum exchange-traded fund (ETF), known as the Grayscale Ethereum Trust. The move comes as part of Coinbase’s efforts to support the expansion of investment options in the cryptocurrency market.
Coinbase petitions SEC
Paul Grewal, Coinbase’s chief legal officer, explained in a letter to the SEC why the commission should approve proposed rule changes for listing and trading shares of Grayscale’s Ethereum ETF. At the heart of Coinbase’s argument is that Ethereum (ETH) does not qualify as a security, a position widely accepted within the cryptocurrency community.
today @Coinbase responded @SECGovRequest your opinion on the proposed proposal @Grayscale Ether Trust ($ETHE) ETP. 27 pages and 96 citations providing the (1) legal, (2) technical, and (3) economic rationale for approval. 1/6
– paulgrewal.eth (@iampaulgrewal) February 21, 2024
Ethereum ETF approval case
One of the key arguments presented by Coinbase was the recent approval of several spot Bitcoin ETFs, setting a precedent for approving similar products for Ethereum. Coinbase believes that Ethereum’s unique proof-of-stake system, which enhances network governance and mitigates risk, strengthens the case for approval of a spot Ethereum ETF.
Also Read: Coinbase Breaks Two-Year Profit Drought, Credits Bitcoin ETF as Success
Highlighting Ethereum’s strengths
Coinbase highlights Ethereum’s decentralized governance system as an important factor in reducing vulnerability to fraud and manipulation. The company also highlights the depth, liquidity, and tight spreads of the Ethereum market, citing these as indicators of maturity and resilience. Coinbase also highlights its collaboration with the Chicago Mercantile Exchange (CME) to share surveillance information and enhance market monitoring capabilities.
investor expectations
The SEC’s previous approval of a spot Bitcoin fund has investors optimistic about the possibility of a similar approval for a spot Ethereum fund. There are currently eight asset managers awaiting a decision from regulators, five of whom have chosen Coinbase as their ETF custodian, reflecting the industry’s confidence in Coinbase’s reliability and expertise.
Key Takeaways:
- Coinbase defends the SEC’s approval of Grayscale’s Ethereum ETF, citing Ethereum’s unsecured status and the recent approval of spot Bitcoin funds as supporting factors.
- Coinbase highlights Ethereum’s proof-of-stake system, decentralized governance, market depth, and liquidity as strengths supporting ETF approval.