Coinbase Urges SEC to Approve Grayscale Ethereum Trust Listing
Coinbase, a leading cryptocurrency exchange, is pushing for the Securities and Exchange Commission (SEC) to approve the listing of the Grayscale Ethereum Trust for trading. In a letter submitted in response to a proposed rule change by NYSE Arca, Coinbase expressed strong support for the listing and trading of Grayscale Ethereum Trust (ETHE) shares as an Ethereum Exchange-Traded Fund (ETF).
Coinbase Argues ETH is a Not a Security
Paul Grewal, Coinbase’s chief legal officer, announced that the company had provided the SEC with a comprehensive argument justifying the approval of the trust for trading. Coinbase argued that Ethereum should be classified as a commodity rather than a security, citing the Commodity Futures Trading Commission’s approval of Ethereum futures, court rulings, and statements from SEC officials.
Grewal emphasized that Ethereum has consistently been treated as a commodity by regulatory bodies and the market. He also highlighted the strong governance of Ethereum’s proof-of-stake mechanism, which reduces the risks of fraud and market manipulation.
Furthermore, Coinbase pointed out that if the SEC has granted approval for spot Bitcoin ETFs, it should extend similar consideration to an Ethereum ETF. The letter also argued that Ethereum futures ETFs are comparable to spot Ethereum-based funds and should not be disregarded by the SEC.
SEC Delays Grayscale’s Ethereum ETF Consideration
The SEC recently extended its consideration of Grayscale’s Ethereum ETF until March 10. SEC Chair Gary Gensler stated that approval for a spot Bitcoin ETF was specific to Bitcoin only. S&P Global analysts have expressed concerns about spot Ethereum ETFs incorporating staking due to potential concentration risks on the blockchain network.
Despite the delay, Craig Salm, Grayscale’s head of legal, expects the SEC to authorize an ETF tied to the Ethereum spot price in the summer of 2024.
Hot Take: Coinbase Advocates for Ethereum ETF Approval
Coinbase’s strong support for the listing and trading of Grayscale Ethereum Trust shares as an ETF reflects the growing demand for regulated investment vehicles in the crypto space. By arguing that Ethereum is a commodity and not a security, Coinbase aims to pave the way for broader adoption and acceptance of cryptocurrencies by traditional financial institutions.
While the SEC’s delay in considering Grayscale’s Ethereum ETF is disappointing, it highlights the complexity and cautious approach taken by regulators towards novel financial products in the crypto industry. However, with increasing interest from institutional investors and market participants, it is likely that we will see more progress in the approval of crypto-based ETFs in the near future.
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