- Coinbase has shown support for Ether ETFs.
- The exchange wrote a letter to the SEC regarding the matter.
- In the letter, Coinbase raised five arguments urging the SEC to approve an ETH ETP.
The largest crypto exchange in the U.S. by trading volume, Coinbase, has urged the Securities and Exchange Commission (SEC) to approve Grayscale’s application to convert its Ethereum Trust into spot Ether ETP.
The development comes after a January 25 decision by the securities regulator to postpone its consideration for Grayscale’s Ether ETF until March 10. On February 22, Coinbase’s chief legal officer demonstrated the exchange’s legal, economic, and technical rationale for why the regulator should approve Grayscale’s fund as the second deadline looms.
Coinbase Urges SEC to Approve Grayscale’s Ether ETP
In an X (Twitter) post, Grewal shared Coinbase’s letter to the SEC, highlighting five key arguments for a spot Ether ETF greenlight, including that the market treats Ethereum as a commodity and not a security.
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“Our letter lays out what anyone knows who's paid even the slightest bit of attention to the subject: ETH is not a security. In fact, before and after the Merge, the SEC, the CFTC, and the market have treated ETH not as a security but a commodity,” Grewal wrote.
Coinbase stated in the letter that SEC’s “arguments in support of listing and trading Bitcoin ETPs apply with equal – and in some ways greater – force for listing and trading” Grayscale’s Ether ETP.
In addressing market manipulation concerns, Coinbase raised a third argument that the ETH market “benefits from very significant depth and liquidity,” as well as a market cap of about $315 billion, making the asset less susceptible to manipulation by bad actors.
Further, the exchange noted in its fourth argument that the Chicago Mercantile Exchange (CME) futures market “represents a regulated market of significant size related to ETH futures,” allowing the exchange to detect attempted manipulation of spot ETH.
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The letter’s last argument urged the SEC to “reasonably arrive at one conclusion” that an ETP with CME ETH futures is inherently similar to an ETP with spot ETH. Coinbase said this makes it “arbitrary and capricious” to permit ETH futures ETPs but deny an ETH spot ETP.
Read why Coinbase’s crypto payment portal ended Bitcoin support:
Coinbase Crypto Payment Portal Drops Bitcoin Support
Find out why Coinbase “played a key role” in Bitcoin ETF approval:
Coinbase Played a “Key Role” in ETF Approvals, CEO States
