Coinbase has endorsed Grayscale’s bid to transform its Ethereum (ETH) Belief into an exchange-traded fund (ETF) in a Feb. 21 letter addressed to the Securities and Alternate Fee (SEC).
Coinbase’s chief authorized officer, Paul Grewal, mentioned the trade’s letter offered the authorized, technical, and financial arguments supporting spot Ethereum funds’ approval. He added:
“Our letter lays out what anybody is aware of who’s paid even the slightest little bit of consideration to the topic: ETH shouldn’t be a safety. In reality, earlier than and after the Merge, the SEC, the CFTC, and the market have handled ETH not as a safety however a commodity.”
Coinbase’s endorsement comes amid growing anticipation within the crypto marketplace for a spot Ethereum ETF, mirroring the market enthusiasm surrounding spot Bitcoin ETFs. Notably, outstanding asset managers like BlackRock and Constancy, amongst others, have additionally filed for their very own Spot Ethereum ETFs.
Why spot ETH ETFs must be authorized
Coinbase outlined 5 essential factors in its letter advocating for the monetary regulators’ approval of an Ethereum ETF.
Firstly, it emphasised Ethereum’s recognition as a commodity, citing cases such because the regulation of ETH futures by the Commodity Futures Buying and selling Fee (CFTC), public statements from Fee officers, and federal courtroom rulings.
Secondly, Coinbase drew parallels with the SEC’s current endorsement of spot Bitcoin ETFs, asserting that this precedent ought to apply equally, if no more forcefully, to the itemizing and buying and selling of ether ETF shares.
The corporate additionally highlighted Ethereum’s Proof-of-Stake mechanism as proof of sturdy governance, highlighting components like possession distribution, liquidity, and resilience towards fraudulent actions.
Moreover, Coinbase identified that Ethereum’s spot buying and selling exercise, excessive liquidity, and tight spreads available in the market point out its effectivity and maturity. It additional emphasised ETH’s substantial notional greenback buying and selling quantity, surpassing many S&P 500 shares.
“ETH’s notional greenback buying and selling quantity is considerably higher than the overwhelming majority of the shares that comprise the S&P 500, together with when adjusted for mixture market worth,” Coinbase added.
Lastly, Coinbase highlighted its subtle market surveillance capabilities to observe ETH spot market buying and selling and stop fraudulent practices, together with its partnership with the Chicago Mercantile Alternate.
In conclusion, Coinbase argued that approving Grayscale’s ETF proposal would align with SEC rules and signify a prudent determination for regulators.
