Coinbase Makes Case for Approval of Ether ETFs in Formal Letter to SEC
Coinbase Makes Case for Approval of Ether ETFs in Formal Letter to SEC
Coinbase has thrown its give a enhance to within the befriend of Grayscale’s utility to transform its Ethereum (ETH) Believe into a neighborhood Ether swap-traded product (ETP).
In a 27-page letter shared on February 22, Coinbase’s chief faithful officer, Paul Grewal, outlined the faithful, technical, and financial rationale for the Securities and Alternate Rate (SEC) to approve an Ether-basically based completely ETP.
One among Coinbase’s key arguments became as soon as that Ether could well also aloof be classified as a commodity as a substitute of a security.
The swap pointed to the Commodity Futures Buying and selling Rate’s approval of Ether futures, statements by SEC officers, and court docket rulings as proof supporting this classification.
SEC No longer Objecting to Treating Ether as Commodity
Coinbase emphasised that the SEC has no longer objected to the treatment of Ether as a commodity by the CFTC, reinforcing its stance.
“Our letter lays out what anyone is aware of who’s paid even the slightest bit of attention to the topic: ETH is no longer a security,” Grewal acknowledged.
He added that both the SEC and the market have handled Ether as a commodity, both earlier than and after the Ethereum network’s upgrade.
Our letter lays out what anyone is aware of who’s paid even the slightest bit of attention to the topic: ETH is no longer a security. Truly, earlier than and after the Merge, the SEC, the CFTC, and the market have handled ETH no longer as a security however a commodity. 2/6
— paulgrewal.eth (@iampaulgrewal) February 21, 2024
Coinbase additionally presented extra arguments in its letter.
It highlighted Ethereum’s proof-of-stake consensus mechanism, which demonstrates stable governance and mitigates risks of fraud and manipulation.
The swap emphasised that the SEC’s approval of space Bitcoin ETPs could well also aloof equally apply, if no longer extra strongly, to an Ethereum ETP.
Market info reveals that ETH possession and procuring and selling enlighten are dispersed, indicating a old and atmosphere pleasant market.
The swap additionally mentioned the technological and operational security mechanisms inherent in Ethereum’s blockchain, which very a lot limit susceptibility to fraud and manipulation.
Coinbase cited its maintain refined market surveillance measures, along side a partnership with the Chicago Mercantile Alternate (CME), to show screen procuring and selling actions on its platforms.
The letter became as soon as submitted in response to a proposed rule swap by NYSE Arca, which goals to list and trade shares of the Grayscale Ethereum Believe (ETHE) as an Ethereum ETP.
The SEC has requested public comments on the proposed rule swap earlier than making a name.
Space ETH ETFs Would perchance well per chance also Lift Centralization Dangers
In the intervening time, there has been concerns relating to the focus possibility associated with space Ethereum ETFs that embrace staking.
Analysts from S&P Global nowadays warned that the introduction of staking in ETFs could well also impact the combine of validators taking allotment within the Ethereum network’s consensus mechanism.
While institutional custodians’ involvement could well also slit focus on the Lido decentralized staking protocol, it’ll also introduce recent focus risks if a single entity is chosen to stake a prime allotment of the incorporated Ether.
“An enlarge in ether staking ETFs could well also have an tag on the combine of validators taking allotment within the Ethereum network’s consensus mechanism,” acknowledged Managing Director Andrew O’Neill.
“The participation of institutional custodians could well also slit the most modern focus on the Lido decentralized staking protocol. Alternatively, it’ll also additionally introduce recent focus possibility, specifically if a single entity is chosen to stake the majority of ether incorporated in these ETFs.”
Source : cryptonews.com
