Nikolas Sargeant
In response to a letter from two U.S. senators urging the SEC to tighten regulations on Bitcoin ETFs and reject further crypto ETF applications, Coinbase's chief legal officer, Paul Grewal, has criticized the senators' stance.
Grewal's rebuttal, posted on March 15, challenges the senators' assertions, stating, "Respectfully Senators, the evidence points exactly the opposite way."
Highlighting what he perceives as falsehoods in the senators' letter, Grewal underscores the depth and liquidity of Ether's spot market, noting that "ETH's spot market is deep and liquid– only two S&P 500 stocks have higher notional dollar trading volume." Additionally, Grewal contends that there is direct evidence demonstrating that Ether's futures and spot markets exhibit a similar level of correlation to Bitcoin's.
The discussion around ETF approvals intensified after a meeting on March 9 between Coinbase, Grayscale, and SEC officials, where Coinbase argued for the approval of spot Ether ETFs on par with Bitcoin ETFs. Some analysts speculate that Grayscale's futures ETF application might serve as a strategic move to push for approval of spot Ether ETFs.
Despite expectations of SEC rejection based on correlation concerns, Coinbase appears committed to advocating for spot Ether ETFs, raising the possibility of escalating tensions with regulators ahead of the May 23 deadline for an ETH ETF decision.
In their letter to SEC Chair Gary Gensler, Senators Jack Reed and Laphonza Butler warned against further crypto ETF approvals, citing risks of fraud and manipulation in thinly traded markets. They specifically highlighted concerns regarding cryptocurrencies smaller than Bitcoin, suggesting they were more susceptible to misconduct.
Currently, eight spot Ether ETF applications await SEC approval, with hopes that other altcoins could follow suit in the future.
