Coinbase, has urged the Securities and Exchange Commission (SEC) to approve Grayscale’s Spot Ether ETF
The largest crypto exchange in the U.S. by trading volume, Coinbase, has urged the Securities and Exchange Commission (SEC) to approve Grayscale’s application to convert its Ethereum Trust into a spot Ether Exchange-Traded Product (ETP).
The development comes after a January 25 decision by the securities regulator to postpone its consideration for Grayscale’s Ether ETF until March 10. On February 22, Coinbase’s chief legal officer demonstrated the exchange’s legal, economic, and technical rationale for why the regulator should approve Grayscale’s fund as the second deadline looms.
In an X (Twitter) post, Grewal shared Coinbase’s letter to the SEC, highlighting five key arguments for a spot Ether ETF greenlight, including that the market treats Ethereum as a commodity and not a security.
“Our letter lays out what anyone knows who’s paid even the slightest bit of attention to the subject: ETH is not a security. In fact, before and after the Merge, the SEC, the CFTC, and the market have treated ETH not as a security but a commodity,” Grewal wrote.
Coinbase stated in the letter that SEC’s “arguments in support of listing and trading Bitcoin ETPs apply with equal – and in some ways greater – force for listing and trading” Grayscale’s Ether ETP.
In addressing market manipulation concerns, Coinbase raised a third argument that the ETH market “benefits from very significant depth and liquidity,” as well as a market cap of about $315 billion, making the asset less susceptible to manipulation by bad actors.
Further, the exchange noted in its fourth argument that the Chicago Mercantile Exchange (CME) futures market “represents a regulated market of significant size related to ETH futures,” allowing the exchange to detect attempted manipulation of spot ETH.
The letter’s last argument urged the SEC to “reasonably arrive at one conclusion” that an ETP with CME ETH futures is inherently similar to an ETP with spot ETH. Coinbase said this makes it “arbitrary and capricious” to permit ETH futures ETPs but deny an ETH spot ETP.
Coinbase’s advocacy for Grayscale’s spot Ether ETF approval reflects a broader industry push to expand access to cryptocurrency investment vehicles. As interest in digital assets continues to soar, investors seek regulated and transparent avenues to participate in the market’s growth.
Grayscale’s conversion of its Ethereum Trust into a spot Ether ETP could provide investors with exposure to Ethereum’s price movements without the complexities of owning and storing the underlying asset. This move aligns with the broader trend of institutional adoption of cryptocurrencies, as traditional financial institutions recognize the value and potential of digital assets.
The delay in SEC’s decision regarding Grayscale’s Ether ETF underscores the regulatory challenges facing the cryptocurrency industry. While regulatory clarity is essential for fostering investor confidence and market stability, navigating the evolving regulatory landscape remains a significant hurdle for industry participants.
Coinbase’s proactive engagement with regulatory authorities highlights the exchange’s commitment to operating within established legal frameworks while advocating for industry-wide innovation and growth. By articulating compelling arguments for Grayscale’s spot Ether ETF approval, Coinbase aims to facilitate greater access to cryptocurrency investment opportunities for retail and institutional investors alike.
As the cryptocurrency market continues to evolve, regulatory developments will play a crucial role in shaping its trajectory. Coinbase’s efforts to advocate for Grayscale’s spot Ether ETF approval signal a broader shift towards mainstream acceptance and integration of digital assets into traditional financial markets.
In conclusion, Coinbase’s appeal to the SEC to approve Grayscale’s spot Ether ETF reflects the growing recognition of cryptocurrencies as legitimate investment assets. By advocating for regulatory approval, Coinbase and other industry stakeholders seek to foster greater accessibility, transparency, and innovation within the cryptocurrency ecosystem, paving the way for broader adoption and acceptance in the years to come.
