Coinbase Makes Case for Approval of Ether ETFs in Formal Letter to SEC
Coinbase has thrown its support behind Grayscale’s application to convert its Ethereum (ETH) Trust into a spot Ether exchange-traded product (ETP).
In a 27-page letter shared on February 22, Coinbase’s chief legal officer, Paul Grewal, outlined the legal, technical, and economic rationale for the Securities and Exchange Commission (SEC) to approve an Ether-based ETP.
One of Coinbase’s key arguments was that Ether should be classified as a commodity rather than a security.
The exchange pointed to the Commodity Futures Trading Commission’s approval of Ether futures, statements by SEC officials, and court rulings as evidence supporting this classification.
Coinbase emphasized that the SEC has not objected to the treatment of Ether as a commodity by the CFTC, reinforcing its stance.
“Our letter lays out what anyone knows who’s paid even the slightest bit of attention to the subject: ETH is not a security,” Grewal said.
He added that both the SEC and the market have treated Ether as a commodity, both before and after the Ethereum network’s upgrade.
Our letter lays out what anyone knows who's paid even the slightest bit of attention to the subject: ETH is not a security. In fact, before and after the Merge, the SEC, the CFTC, and the market have treated ETH not as a security but a commodity. 2/6
— paulgrewal.eth (@iampaulgrewal) February 21, 2024
Coinbase also presented additional arguments in its letter.
It highlighted Ethereum’s proof-of-stake consensus mechanism, which demonstrates strong governance and mitigates risks of fraud and manipulation.
The exchange emphasized that the SEC’s approval of spot Bitcoin ETPs should equally apply, if not more strongly, to an Ethereum ETP.
Market data shows that ETH ownership and trading activity
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