Coinbase, one of many main cryptocurrency exchanges, has formally responded to the Securities and Change Fee (SEC) relating to the proposal for a spot Ethereum Change-Traded Fund (ETF). Paul Grewal, Coinbase’s Chief Authorized Officer, introduced by means of social media platform X that the corporate submitted a complete 27-page response, full with 96 citations, to advocate for the approval of the proposed Grayscale Ether Belief (ETHE) ETP.
Right now @coinbase responded to @SECGov’s request for touch upon the proposed @Grayscale Ether Belief ($ETHE) ETP. 27 pages and 96 citations that present the (1) authorized, (2) technical, and (3) financial rationale for approval. 1/6
— paulgrewal.eth (@iampaulgrewal) February 21, 2024
Ethereum’s Classification As A Commodity
The cornerstone of Coinbase’s argument rests on the classification of ETH as a commodity somewhat than a safety. Grewal’s articulation, “ETH will not be a safety…earlier than and after the Merge, the SEC, the CFTC, and the market have handled ETH not as a safety however a commodity,” underscores the consensus amongst regulatory our bodies and market members relating to Ethereum’s standing. This classification aligns with the authorized framework essential for the SEC to contemplate an ETF primarily based on ETH.
Precedent Set By Bitcoin ETF Approvals
Coinbase leverages the SEC’s prior approval of Bitcoin ETFs as a precedent, advocating for constant regulatory therapy for Ethereum. Grewal posits, “The economics present that ETH is as resilient as BTC in satisfying the Fee’s customary for ETP approvals,” highlighting the parallel between Ether’s and Bitcoin’s market robustness and maturity. This comparability serves to remind the SEC of the rationale behind its earlier choices and suggests the same method for ETH.
Technological And Operational Safety Of Ethereum
The submission emphasizes the technological and operational safety mechanisms inherent in Ethereum’s blockchain, notably post-Merge. The transition to Proof of Stake is offered as a big enhancement to Ethereum’s safety features, decreasing its susceptibility to fraud and manipulation. This technological robustness is a important think about Coinbase’s argument, underscoring the reliability and stability of ETH as an underlying asset for an ETF.
Market Dynamics And Resilience
Coinbase presents an in depth evaluation of Ethereum’s market dynamics, together with its depth, liquidity, and the tightness of spreads. Grewal notes, “ETH’s market depth, tightness of spreads, and value correlation throughout spot markets are extremely indicative of a market resilient to fraud and manipulation.” This argument is designed to guarantee the SEC of ETH’s market stability and its capability to help an ETF with out introducing vital dangers to buyers.
Surveillance-Sharing Settlement And Market Oversight
Lastly, Coinbase highlights the surveillance-sharing settlement with the Chicago Mercantile Change (CME) as a mechanism for making certain complete market oversight. This settlement, as described by Grewal, “facilitates the sharing of data…by means of its surveillance of the CME ETH futures market,” which is essential for monitoring and stopping fraudulent and manipulative practices within the ETH market.
In conclusion, Coinbase’s submission to the SEC is a rigorously constructed argument that mixes authorized precedent, technical safety, and market stability analyzes to advocate for the approval of a spot Ethereum ETF.
Normal Chartered predicts SEC approval for an Ethereum ETF by Might 23, doubtlessly inflicting a value surge to $4,000 for ETH. Nonetheless, Dave LaValle, head of Grayscale ETFs, not too long ago stated there may be solely a 50% probability that the SEC will approve the conversion of its ETH belief right into a spot ETF in Might.
At press time, ETH traded at $2,961.
Featured picture created with DALLE, chart from TradingView.com
