Coinbase's Legal Chief Counters US Senators' Call for Stricter Crypto ETF Regulations
Summary:
Coinbase's chief legal officer, Paul Grewal, criticizes a letter by U.S. Senators urging stricter regulation of Bitcoin ETFs and pause on further crypto ETF applications. Grewal believes approval of such ETFs offer no additional risk to investors. He highlights that the trading statistics of certain smaller cryptocurrencies, like Ether (ETH), exceed even the largest traded equities. Insiders suggest that Coinbase's support for spot Ether ETFs could lead to potential regulatory conflict ahead of the May 23 deadline for the ETH ETF decision.
Coinbase's top legal counselor, Paul Grewal, has harshly criticized a letter penned by two U.S. Senators urging the SEC to apply stricter regulation to Bitcoin ETFs and halt any additional crypto ETF proposals. In a post on March 15 to X, Grewal disagreed with the sentiments of the Senators' March 11 letter, which suggested that sanctioning more crypto ETFs beyond Bitcoin might subject investors to immense financial hazards. Grewal contested, suggesting that the evidence showed a contrary scenario.
Source: Paul Grewal on X
Grewal further highlighted that the trading statistics of various cryptocurrencies, including Ether (ETH), smaller than Bitcoin, showcase prime metrics that surpass even the biggest equity shares. Grewal pointed out that the ETH's spot market was abundant and liquid. He highlighted that only two S&P 500 stocks have a better dollar trading volume.
Moreover, Grewal indicated the robust relationship between Ether’s futures and spot markets aligns with Bitcoin’s similar correlation. On March 9, Coinbase and Grayscale, a crypto asset management firm, met with SEC officials to propose a rule alteration for the spot Ether ETFs launch. Here, Coinbase argued that if Bitcoin ETFs received SEC approval, Ether ETFs should too.
Several industry commentators, including general partner at VB Capital, Scott Johnson, and Bloomberg ETF expert, Eric Balchunas, anticipate SEC's refusal of the pending ETH ETFs on the correlation rationale. Nate Geraci, the president of the ETF Store, supported Coinbase's stance on endorsing spot Ether ETFs. He also suggested a potential regulatory battle could cultivate over the May 23 deadline for the ETH ETF verdict. Geraci pinned SEC's resistance to Ether ETFs on political underpinnings. Source: Nate Geraci on X
In his follow-up post, Geraci implied the scenario was not about 'safeguarding investors' but rather politics. He stated that despite the SEC's gearing up to reject pending Ether ETF applications, they had already sanctioned Ether futures ETFs. Related: BlackRock's Bitcoin ETF records daily volume as BTC recoups slump.
In their March 11 letter to SEC Chair Gary Gensler, Democratic Senators Jack Reed and Laphonza Butler warned that subsequent approval of crypto ETFs might expose investors to fraudulent manipulation in 'thinly traded' markets. They further expressed concern that cryptocurrency markets smaller than Bitcoin were more susceptible to misconduct.
Eight applications for spot Ether ETFs currently await SEC approval. The crypto industry harbors hopes that other altcoins might follow a similar trajectory.
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Published At
3/15/2024 6:55:45 AM
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