Nasdaq-listed cryptocurrency exchange Coinbase has thrown its weight behind Grayscale Investments’ application to convert its Ethereum Trust into a spot Ether exchange-traded product (ETP).
In a 27-page letter submitted to the Securities and Exchange Commission (SEC), Coinbase outlined several key arguments supporting the approval of the ETP. Central to Coinbase’s argument is the classification of ETH as a commodity, not a security, as reflected by the approval of Ether futures by the Commodity Futures Trading Commission (CFTC), SEC officials’ statements, and court rulings.
Beyond that, Coinbase emphasized the inherent security of Ethereum’s Proof-of-Stake consensus algorithm, arguing it demonstrably mitigates the risk of fraud and manipulation through its decentralized structure, distributed ownership, and robust liquidity.
Drawing parallels with the recently approved spot Bitcoin ETFs, Coinbase contends that the rationale for their approval applies equally, if not more strongly, to an Ethereum ETP. The exchange pointed to the Ethereum market’s liquid and dispersed nature, with tight spreads indicative of its maturity and efficiency.
Additionally, they argue that the close correlation between Bitcoin and Ethereum futures ETFs renders it arbitrary for the SEC to approve one but not the other, while underscoring the network’s security mechanisms and their ability to limit manipulation and fraud.
Finally, Coinbase emphasizes its own robust market surveillance capabilities and its existing agreement with the Chicago Mercantile Exchange
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- Source: https://www.cryptocompare.com/email-updates/daily/2024/feb/22/
