Grayscale and Coinbase Meet SEC to Discuss Spot Ether ETF, Addressing Market Manipulation Concerns

Leading cryptocurrency firms Grayscale and Coinbase engaged in discussions with officials from the United States Securities and Exchange Commission (SEC) on March 6 regarding a proposed rule change for the introduction of spot Ether exchange-traded funds (ETFs). The meeting followed the completion of the commenting period for Grayscale’s proposal to convert its Ethereum Trust into an ETF, similar to the successful conversion of its Bitcoin Trust into an ETF in January.

During the meeting, Coinbase presented arguments to the SEC, asserting that the same rationale that led to the approval of Bitcoin ETFs should be applied to Ether. Coinbase emphasized the mechanisms in place that significantly limit Ether’s susceptibility to fraud and manipulation. The presentation also highlighted Coinbase’s surveillance-sharing agreement with the Chicago Mercantile Exchange (CME), which is designed to enhance trading monitoring.

Coinbase underscored the correlation between Ether futures and spot markets, drawing parallels with the Bitcoin market. Nate Geraci of ETF Store noted that the SEC had previously approved CME-traded Ether futures ETFs, raising questions about the grounds for disapproval of spot Ether ETFs.

Grayscale is also seeking approval for a second ETF focused on Ether futures trading. The distinction between spot and futures markets lies in the immediate trading of assets in the spot market, while futures contracts involve agreements to buy or sell assets at a predetermined price on a future date.

There are speculations that Grayscale may be strategically using its futures ETF application as a means to encourage the SEC to approve its spot Ether ETF. Other prominent asset managers, including Invesco, Galaxy Digital, Fidelity, Franklin Templeton, and BlackRock, are also pursuing approval for spot Ether ETFs. The SEC is expected to make final decisions on these proposals in May.

Eric Balchunas of Bloomberg expressed uncertainty about regulators’ views on crypto investment vehicles, emphasizing that the SEC has not yet provided comments to issuers, which he considered a potential concern. The discussions and proposals reflect the evolving regulatory landscape for cryptocurrency investment products and the industry’s efforts to gain approval for diverse investment offerings.

By Urik

My professional background is in public relations and I am the founder of Cryptochating. My journey into blockchain technology started four years ago, and I haven't looked back since then. The future of decentralized technology is incredibly fascinating to me, and I am passionate about communicating how it will change the world.

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