In light of recent developments and the growing popularity of Ethereum (ETH), US cryptocurrency exchange Coinbase has come out in support of Grayscale's application to convert its Ethereum Trust into a spot exchange-traded product.
This statement in support of Grayscale and Ethereum contains 5 arguments why the SEC should approve a spot Ethereum ETF, reports Cointelegraph.
Paul Grewal, Coinbase's Chief Legal Advisor, emphasized in the letter that Ethereum is not classified as a security, as evidenced by the Commodity Futures Trading Commission's approval of ETH futures, statements by SEC officials, and court decisions.
In addition, Grewal underlined that the transition to the Ether Proof of Stake mechanism has demonstrated sound governance, as evidenced by factors such as ownership distribution, consensus mechanisms, liquidity, and governance practices that help mitigate risks associated with fraud and market manipulation.
At the same time, high levels of ETH ownership, trading activity, and liquidity, as well as narrow spreads, indicate an efficient and mature market.
The letter was sent in response to a proposed rule change by NYSE Arca to list and trade shares of Grayscale Ethereum Trust (ETHE) as Ethereum ETPs. As required by law, the SEC is soliciting comments on the proposed rule changes to gather public input before making a decision.
Grayscale has gained notoriety for its key role in promoting spot Bitcoin ETFs. Last year, the company filed a lawsuit against the SEC, challenging its denial of an application to convert the GBTC Bitcoin Trust into a spot ETF.
Ethereum topped $3,000 on Wednesday, but experienced some pullback amid a broader market sell-off. At the time of writing, ETH is trading at $2,958 and has a market cap of $353.7 billion.
It's worth noting that since the start of 2024, Ethereum has gained 30 percent, compared to Bitcoin's 22 percent gain.
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