Crypto Giants Grayscale and Coinbase Push for Spot Ether ETFs in SEC Discussion
Summary:
Crypto companies Grayscale and Coinbase met with SEC representatives to discuss a rule change that would allow the introduction of spot Ether exchange-traded funds (ETFs). Grayscale aims to convert its Ethereum Trust into an ETF, similar to its previous Bitcoin transition. Due to the ETH token's built-in protections against fraud and manipulation, Coinbase argued, the same rationale used for approving Bitcoin ETFs should be applied to Ether. Grayscale is also proposing a separate ETF for Ether futures trading. Many asset management firms are awaiting approval for a spot Ether ETF, with final decisions expected in May.
Grayscale and Coinbase, two prominent crypto entities, recently held discussions with representatives from the Securities and Exchange Commission to negotiate a modification in regulations that would permit the introduction of spot Ether exchange-traded funds (ETFs). Grayscale hopes to alter its existing Ethereum Trust - designed to mirror the Ether (ETH) marketplace value - into an ETF, an approach akin to its Bitcoin ETF conversion earlier this year. The dialogue, held on March 6, addressed apprehensions regarding potential market manipulation in the event the fund receives approval, following the conclusion of the proposal's public comment duration. Coinbase posited during a presentation reviewed by the SEC that the logic resulting in the sanctioning of Bitcoin ETFs should extend to Ether due to the token's built-in safeguards drastically reducing its vulnerability to fraud and exploitation.
Coinbase also mentioned its surveillance-sharing pact with the Chicago Mercantile Exchange (CME), an arrangement enforced on Bitcoin ETFs at the behest of the SEC to better oversee trading activities. The company further stressed the similar correlation observed between Ether futures and spot markets with that of the Bitcoin market, as pointed out by Nate Geraci of ETF Store on X (previously known as Twitter). He added, with SEC approval already granted for CME-traded Ether futures ETFs, grounds for disapproving spot Ether ETFs were unclear.
Grayscale has additionally proposed a separate ETF for Ether futures trading. The primary distinction between spot and futures markets lies in the spot market dealing with immediate asset trades, as opposed to the futures market where contracts are entered into for future asset trades at a predetermined price. Some observers theorize that Grayscale might be leveraging its futures ETF proposal to compel the SEC into approving its spot Ether ETF.
Numerous asset management firms, such as Invesco, Galaxy Digital, Fidelity, Franklin Templeton, and BlackRock, are vying for authorization for a spot Ether ETF, with decision deadlines anticipated in May. Bloomberg's Eric Balchunas suggests asset managers remain uncertain about regulators' stance on the crypto investment mechanism, stating that despite seeming positive, the lack of communication from the Staff to the issuers is not a promising sign compared to their input during the Bitcoin ETFs discourse.
Published At
3/10/2024 12:02:23 AM
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