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Coinbase, one of many main cryptocurrency exchanges, has formally responded to the Securities and Alternate Fee (SEC) concerning its proposal for a spot Ethereum exchange-traded fund (ETF). Coinbase Chief Authorized Officer Paul Grewal stated the social media platform
Right now @coinbase responded to @SECGovRequest for feedback on proposed @grayscale Ether Belief ($ETHE) ETP. 27 pages and 96 citations that present (1) authorized, (2) technical, and (3) financial arguments for approval. 1/6
– paulgrewal.eth (@iampaulgrewal) 21 February 2024
Classification of Ethereum as a commodity
The cornerstone of Coinbase's argument rests on classifying ETH as a commodity somewhat than a safety. “ETH will not be a safety…earlier than and after the merger, the SEC, CFTC, and the market have handled ETH as a commodity, not a safety,” Grewal stated concerning the standing of Ethereum with regulatory our bodies and Underlines the consensus amongst market contributors. This classification is consistent with the authorized framework required for the SEC to contemplate an ETF based mostly on ETH.
Precedent set by Bitcoin ETF approval
Coinbase, whereas persistently advocating for constant regulatory therapy for Ethereum, leverages the SEC's prior approval of a Bitcoin ETF as a precedent. “The economics present that ETH is as resilient as BTC in assembly the Fee’s customary for ETP approval,” Grewal says, highlighting the similarities between the market power and maturity of Ether and Bitcoin. This comparability serves to remind the SEC of the reasoning behind its earlier selections and suggests the same method for ETH.
Technical and operational safety of Ethereum
The presentation emphasizes the technical and operational safety mechanisms inherent in Ethereum's blockchain, significantly post-merger. The change to Proof of Stake is introduced as a major enhancement to Ethereum's security measures, decreasing its susceptibility to fraud and manipulation. This technical power is a key think about Coinbase's argument, underscoring the reliability and stability of ETH because the underlying asset for the ETF.
Market dynamics and suppleness
Coinbase presents detailed evaluation of Ethereum's market dynamics, together with its depth, liquidity, and unfold tightness. “ETH’s market depth, power of spreads, and worth correlation in spot markets are extremely indicative of a market resilient to fraud and manipulation,” says Grewal. This argument is designed to guarantee the SEC of the market stability of ETH and its potential to help an ETF with out presenting important danger to buyers.
Surveillance-Sharing Settlement and Market Surveillance
Lastly, Coinbase highlighted its monitoring-sharing settlement with the Chicago Mercantile Alternate (CME) as a mechanism to make sure complete market monitoring. This settlement, as described by Grewal, “facilitates data sharing… by way of the monitoring of the CME ETH futures market,” which is vital to monitoring and stopping fraudulent and manipulative practices within the ETH market.
In conclusion, Coinbase's presentation to the SEC is a rigorously constructed argument that mixes authorized precedent, technical safety, and market stability evaluation to advocate for approval of the Spot Ethereum ETF.
Customary Chartered predicts SEC approval for an Ethereum ETF by Might 23, doubtlessly driving the value of ETH to $4,000. Nevertheless, Grayscale ETFs head Dave Lavelle just lately stated there’s solely a 50% likelihood the SEC will approve changing its ETH belief to a spot ETF in Might.
At press time, ETH was buying and selling at $2,961.
Featured picture created with DALLE, chart from tradingview.com