Coinbase urges SEC to approve conversion of Grayscale Ethereum Trust into physical Ether ETF

Coinbase urged the Securities and Exchange Commission (SEC) to approve the conversion of Grayscale’s Ethereum Trust into an ETH exchange-traded fund (ETF), arguing that ETH is a commodity and not a security.

The SEC itself, the Commodity Futures Trading Commission (CFTC) and the cryptocurrency markets have all “treated ETH as a commodity rather than a security,” said Chief Legal Officer Paul Grewal. post X refers to a 27-page letter submitted to the SEC in support of the transition.

“Our letter tells us who we know of who has paid the slightest attention to this subject,” he added. “ETH is not a security.”

Whether Ether is a security is considered important to the SEC’s likelihood of approving a spot Ether ETF. When regulators approved a spot Bitcoin ETF last month, Chairman Gary Gensler made it clear that approval would be limited to ETFs that “hold Bitcoin, a non-secure commodity.”

He added that the approval “in no way signals the Commission’s intention to approve listing standards for crypto-asset securities.” Gensler previously stated that all cryptocurrencies except Bitcoin are securities.

Coinbase says ETH is “resilient to fraud.”

The Coinbase letter came in response to the SEC’s request for comment on the Grayscale conversion proposal. Ethereum Trust the spot Ether ETF. also Addressed SEC concerns about potential market manipulation by cryptocurrency ETFs.

“ETH’s market depth, tight spreads, and price correlation across the spot market are highly indicative of the market’s resilience to fraud and manipulation,” he said. “The technical and operational security mechanisms inherent in the Ethereum blockchain significantly limit ETH’s vulnerability to fraud and manipulation.”

Economics have shown that ETH is just as resilient as BTC in meeting the Commission’s standards for ETP approval. 4/6 pic.twitter.com/wDsnMFGZhL

– paulgrewal.eth (@iampaulgrewal) February 21, 2024

Gensler has no political incentive to approve a spot ETH ETF.

Investment bank TD Cowen said in a Jan. 29 note that Gensler had no political incentive to: Ether ETF approvedThis decision was called a ‘political calling’.

On-site approval was predicted. Ethereum ETF It likely won’t happen until late 2025 or early 2026.

Wall Street giant JPMorgan said there was only a 50% chance the ETF would be approved by May this year.

When will a seat be available? $ETH ETF? @ARKInvest“Soon,” said Tom Staudt, president and COO of .

Full discussion: https://t.co/hbeY4TTr4f https://t.co/gjZghlre4M pic.twitter.com/NWNOtldp1T

— Eleanor Terrett (@EleanorTerrett) January 24, 2024

On the other hand, Tom Staudt, President and COO of ARK Invest, believes that a spot Ether ETF will receive approval from the SEC “soon.”

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