Paul Grewal, the general counsel of the US-listed cryptocurrency exchange Coinbase, announced that they have responded to the request for comments from the US Securities and Exchange Commission (SEC) regarding the application to convert Grayscale Ethereum Trust (ETHE) into an Ethereum spot ETF. They have provided three major reasons urging the SEC to approve the application.
Background:
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The SEC approved the listing of 11 Bitcoin spot ETFs in January, with 8 of them selecting Coinbase as the custodial service provider, making Coinbase a big winner. Coinbase CEO Brian Armstrong further revealed during the earnings conference call last Thursday that among the 8 Ethereum spot ETF applications currently submitted, 5 of them have chosen Coinbase as the custodian.
While the SEC is still reviewing these Ethereum spot ETF applications, Paul Grewal, the general counsel of Coinbase, tweeted today that Coinbase has responded to the SEC’s request for comments on the application to convert Grayscale Ethereum Trust (ETHE) into an Ethereum spot ETF. Coinbase has provided three major reasons why the SEC should approve this application:
1. ETH is not a security. In fact, before and after the merger, the SEC, CFTC, and the market no longer consider ETH as a security but as a commodity.
2. Ethereum’s Proof of Stake (PoS) has significant governance capabilities, demonstrating strong characteristics in terms of ownership concentration, consensus, liquidity, and governance, thereby reducing the risks of fraud and manipulation.
3. Economic data shows that ETH is just as resilient as BTC in meeting the SEC’s ETP approval criteria.
Paul Grewal stated that Coinbase will focus on making wise regulatory decisions, supporting innovation, and fostering a transparent, secure, and inclusive financial ecosystem in the rapidly evolving cryptocurrency environment through continuous dialogue and research.
Key approval timeline: May 23
So far, institutions such as BlackRock, Hashdex, ARk 21Shares, VanEck, and Fidelity have submitted a total of 8 Ethereum spot ETF applications to the SEC. In the past few weeks, the SEC has postponed the decision deadlines for Ethereum spot ETF applications from Fidelity, BlackRock, Grayscale, Invesco/Galaxy, and others.
Image: Timeline of the 8 Ethereum spot ETF applications. Source: Bloomberg
Analyst James Seyffart from Bloomberg previously stated that he expects the SEC to further delay the decision deadlines for more Ethereum spot ETFs in the coming months. The only important date for Ethereum spot ETFs is May 23, as this is the final approval deadline for VanEck’s application.
Further reading:
SEC postpones Invesco/Galaxy Ethereum spot ETF! Bloomberg analyst reiterates the significance of May 23.
Standard Chartered Bank: Ethereum spot ETF to be approved by the SEC on May 23, ETH surges to $4,000.
Is the SEC planning to “forcefully reject” Ethereum spot ETFs? Insiders say Gensler still considers ETH as a security.