Grayscale and Coinbase Meet with SEC to Push for Spot Ether ETFs

Grayscale and Coinbase recently engaged in discussions with the U.S. Securities and Exchange Commission (SEC) to advocate for the approval of spot Ether exchange-traded funds (ETFs). Coinbase presented arguments supporting the approval of Ether ETFs, drawing parallels with the earlier approval of Bitcoin ETFs. Grayscale, on its part, is not only pursuing the spot ETF but has also proposed an Ether futures ETF, highlighting the strategic difference between immediate asset trades in the spot market versus the futures market's contractual agreement for future trades.

Crypto firms Grayscale and Coinbase recently engaged in discussions with the U.S. Securities and Exchange Commission (SEC) to advocate for the approval of spot Ether exchange-traded funds (ETFs).

This dialogue, part of an ongoing effort to broaden the accessibility of cryptocurrency investments, took place on March 6, immediately after the comment period for Grayscale’s proposal to convert its Ethereum Trust into an ETF ended.

Grayscale aims to replicate its successful conversion of its Bitcoin Trust into an ETF with Ethereum, addressing SEC concerns regarding market manipulation risks.

During the meeting, Coinbase presented arguments supporting the approval of Ether ETFs, drawing parallels with the earlier approval of Bitcoin ETFs.

They highlighted the inherent mechanisms within Ether that mitigate the risks of fraud and manipulation, suggesting that Ether’s market dynamics are substantially similar to those of Bitcoin.

Furthermore, Coinbase underscored its surveillance-sharing arrangement with the Chicago Mercantile Exchange (CME), a regulatory measure designed to enhance trading oversight, which was a stipulation by the SEC for the Bitcoin ETFs.

Coinbase’s Nate Geraci pointed out the strong correlation between Ether’s futures and spot markets, akin to Bitcoin’s, questioning any rationale for the SEC to reject spot Ether ETFs especially after approving Ether futures ETFs traded on the CME.

Grayscale, on its part, is not only pursuing the spot ETF but has also proposed an Ether futures ETF, highlighting the strategic difference between immediate asset trades in the spot market versus the futures market’s contractual agreement for future trades.

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The push for the approval of a spot Ether ETF is not limited to Grayscale and Coinbase; several prominent asset managers, including Invesco, Galaxy Digital, Fidelity, Franklin Templeton, and BlackRock, are also in the race.

They eagerly await the SEC’s final decision, anticipated in May, amid a backdrop of regulatory uncertainty that has left many wondering about the SEC’s stance on this innovative investment vehicle.

Bloomberg’s Eric Balchunas shared his insights on the situation, noting the unusual silence from the SEC regarding their views on the proposed crypto ETFs, contrasting this with the more communicative approach taken during the Bitcoin ETF discussions.

This silence has stirred concerns among asset managers, who remain hopeful yet uncertain about the prospects of introducing spot Ether ETFs to the market.

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