- Coinbase advocates for spot ether ETF approval, citing legal and technical merits.
- Approval could impact Coinbase’s custodial business and reflect evolving regulations.
Coinbase, a leading cryptocurrency exchange, has taken a proactive stance in advocating for the approval of the Grayscale Ethereum Trust listing as a spot ether Exchange-Traded Fund (ETF). The company’s Chief Legal Officer, Paul Grewal, recently announced on social media platform X that Coinbase has responded to a request for comment from the Securities and Exchange Commission (SEC) regarding this matter.
In their response to the SEC, Coinbase outlined compelling legal, technical, and economic arguments in support of approving spot ether ETFs. Central to their argument is the assertion that Ethereum (ETH) is not a security but rather a commodity. Mentioning, it is a viewpoint supported by various regulatory bodies and legal precedents.
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
Key Points from Coinbase’s Response to the SEC
Notably, Coinbase emphasized that ETH’s classification as a commodity has been recognized by the Commodity Futures Trading Commission (CFTC) and underscored by federal court rulings.
Furthermore, it highlighted the robustness of Ethereum’s blockchain technology, which inherently limits susceptibility to fraud and manipulation. They pointed to Ethereum’s market depth, tight spreads, and price correlation across spot markets as indicators of its resilience to fraudulent activities. Notably, Coinbase referenced Ethereum’s substantial trading volume, surpassing many stocks in the S&P 500.
Coinbase also drew parallels to the SEC’s previous approval of spot Bitcoin ETFs. They argue that similar reasoning should apply to spot ether ETFs. They stressed the importance of comprehensive surveillance-sharing agreements. Such as the one between the exchange and the CME Group, in detecting. Also, preventing fraudulent or manipulative practices in the ether market.
Meanwhile, the approval of spot ether ETFs could significantly impact Coinbase’s custodial business, as actively participates in numerous bitcoin ETFs. And holds the designation as a staking institution by major ether staking ETFs globally.
As analysts predict potential approval as early as May, Coinbase’s proactive engagement underscores the industry’s anticipation. And highlights the evolving regulatory landscape surrounding cryptocurrencies.
