Coinbase, a leading cryptocurrency company, has urged the US Securities and Exchange Commission (SEC) to greenlight Grayscale’s proposed spot Ethereum exchange-traded fund (ETF), known as Grayscale Ethereum Trust. The move comes as part of Coinbase’s efforts to support the expansion of investment options in the cryptocurrency market.
Coinbase Plea to the SEC
In a letter addressed to the SEC, Coinbase’s Chief Legal Officer, Paul Grewal, outlined the reasons why the Commission should approve the proposed rule change to list and trade Grayscale’s Ethereum ETF shares. Central to Coinbase’s argument is the assertion that Ethereum (ETH) does not qualify as a security, a stance that has been widely recognized within the cryptocurrency community.
Today @coinbase responded to @SECGov‘s request for comment on the proposed @Grayscale Ether Trust ($ETHE) ETP. 27 pages and 96 citations that provide the (1) legal, (2) technical, and (3) economic rationale for approval. 1/6
— paulgrewal.eth (@iampaulgrewal) February 21, 2024
Case for Ethereum ETF Approval
One of the key arguments put forth by Coinbase is the recent approval of several spot Bitcoin ETFs, which sets a precedent for approving similar products for Ethereum. Coinbase believes that Ethereum’s unique proof-of-stake system, which enhances network management and mitigates risks, strengthens the case for approving a spot Ethereum ETF.
Also Read: Coinbase Breaks 2-Year Profit Drought, Credits Bitcoin ETFs for Success
Emphasizing Ethereum’s Strengths
Coinbase highlights Ethereum’s decentralized governance system as a crucial factor in reducing susceptibility to fraud and manipulation. The company also underscores the depth, liquidity, and tight spreads of the Ethereum market, citing them as indicators of maturity and resilience. Additionally, Coinbase points to its collaboration with the Chicago Mercantile Exchange (CME) to share surveillance information, enhancing market monitoring capabilities.
Investor Anticipation
With the SEC’s previous approval of spot Bitcoin funds, investors are optimistic about the prospects of similar approval for spot Ethereum funds. Currently, eight asset managers await the regulator’s decision, with five of them selecting Coinbase as their ETF custodian, reflecting the industry’s confidence in Coinbase’s reliability and expertise.
Key Takeaways:
- Coinbase advocates for the SEC’s approval of Grayscale’s Ethereum ETF, citing Ethereum’s non-security status and 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 that bolster its case for an ETF approval.
