March 27, 2024
Coinbase Advocates SEC Approval for Grayscale Ethereum ETF
Altcoins News

Coinbase Advocates SEC Approval for Grayscale Ethereum ETF

Coinbase, a prominent player in the cryptocurrency space, has urged the US Securities and Exchange Commission (SEC) to greenlight Grayscale’s proposed Ethereum exchange-traded fund (ETF), the Grayscale Ethereum Trust. This plea was communicated through a letter from Coinbase’s chief legal officer, Paul Grewal, to the SEC.

In the letter, Coinbase contends that the Exchange’s proposal to list and trade the ETF satisfies the criteria outlined in Section 6(b)(5) of the Exchange Act, providing a detailed rationale for the SEC to approve the request.

The correspondence was prompted by the SEC’s call for public input on the proposed Grayscale Ethereum Trust. According to Grewal, Coinbase’s central argument is that Ethereum (ETH) should not be classified as a security, a perspective well-known to those familiar with Ethereum and its legal standing.

A key point raised in the letter is the recent approval of several Bitcoin ETFs, which Coinbase views as a compelling precedent for endorsing an Ethereum ETF.

Furthermore, Coinbase lauds Ethereum’s proof-of-stake mechanism, highlighting its effectiveness in managing the network and minimizing risks, thereby fortifying the platform’s reliability. This assessment is particularly relevant given concerns surrounding concentration risks within the Ethereum network, especially considering the anticipated surge in demand for spot Ethereum ETFs.

The letter also underscores Ethereum’s robust and decentralized governance structure, which diminishes susceptibility to fraudulent activities and manipulation, given the absence of a central authority overseeing its development.

Additionally, Coinbase emphasizes Ethereum’s market maturity, liquidity, and narrow spreads as indicators of a resilient market. It also mentions its collaboration with CME to exchange surveillance data, enabling enhanced monitoring and detection of potential market misconduct related to ETH.

Overall, Coinbase asserts that Ethereum’s market strength and regulatory compliance warrant approval for spot Ethereum funds, echoing the optimism of investors eagerly awaiting the SEC’s decision. Notably, five out of the eight asset managers seeking approval have selected Coinbase as their ETF custodian, signaling confidence in the platform’s capabilities.

Image by Bastian Riccardi from Pixabay

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