Grayscale, Coinbase Meet with SEC on SpotEther ETF
Crypto companies Grayscale and Coinbase recently met with United States Securities and Exchange Commission (SEC) officials to discuss changes to the rules for launching spot ether exchange-traded funds (ETFs).
Grayscale is looking to convert the Ethereum Trust – which tracks the market value of Ether (ETH) – into an ETF, similar to the Bitcoin Trust's conversion into an ETF in January. The March 6 meeting followed the close of the comment period and raised concerns about market manipulation if the funds were to be approved.
According to a presentation shared with the SEC, Coinbase argued that the same reasoning that ended its approval of Bitcoin ETFs should apply to Ether because the token has “mechanisms that significantly limit ETH's vulnerability to fraud and manipulation.”
Another point of presentation relates to Coinbase's intelligence sharing agreement with the Chicago Mercantile Exchange (CME). The method to improve transaction monitoring has been applied to Bitcoin ETFs at the request of the SEC.
Coinbase has also emphasized the link between Ether futures and spot markets, similar to the Bitcoin market, explained Nate Geraci, partner of ETF Store at X. “Add to that the SEC's approval of the CME-traded ether futures ETFs, and I'm not sure what the reason is for opposition. They're going to be spot ether ETFs.”
Grayscale proposes a second ETF for Ether futures trading. The main difference between spot and futures markets is that in the spot market, assets are traded immediately, whereas in the futures market, contracts are entered into to buy or sell assets at a certain future price.
Some analysts have suggested that Grayscale could use the futures ETF application as a “Trojan horse” to get the SEC to approve the spot Ether ETF.
Several asset managers, including Invesco, Galaxy Digital, Fidelity, Franklin Templeton and BlackRock, are seeking the green light for space ether ETFs. SEC decision deadlines are expected in May.
Bloomberg's Eric Balchunas believes asset managers are still in the dark about regulators' views on the crypto investment vehicle. “Normally I'd say this was it. [a] A good sign, but as far as I know, the staff has not made any comments to the issuers yet, which is not a good sign from the past when they made comments on BTC ETFs,” said Balchunas.
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