Coinbase Chief Legal Officer Paul Grewal condemned a letter from two U.S. senators asking the SEC to more tightly regulate Bitcoin ETFs and deny future crypto ETF applications.
On March 15th post Grewal criticized the senator's recent March 11 letter to X. The letter argued that approval of a cryptocurrency ETF that exceeds Bitcoin would expose investors to “enormous risk.”
“Senators, the evidence shows quite the opposite,” Grewal responded.
Grewal explained that the market for many smaller cryptocurrencies than Bitcoin, particularly ether (ETH), shows high-quality indicators that “outperform even the largest traded stocks.”
“The spot market for ETH is deep and highly liquid. Only two stocks in the S&P 500 have high notional dollar volume,” Grewal added.
Grewal added that there is direct evidence that Ether futures and spot markets are similarly correlated to Bitcoin.
“Compared to Bitcoin, the ETH futures and spot markets exhibit exactly the same kind of high and consistent correlation that allows for market monitoring.”
On March 9, Coinbase and crypto asset management firm Grayscale met with SEC officials to discuss rule changes regarding the launch of a Spot Ether ETF. He also argued that it should be approved.
Some analysts have suggested that Grayscale may be using its futures ETF application as a “Trojan horse” to corner the SEC into approving a Spot Ether ETF.
Multiple industry experts, including VB Capital General Partner Scott Johnson and Bloomberg ETF Analyst Eric Balchunas, have cited the SEC's suspension due to “correlation” (the difference between spot and futures prices). We predict that the ETH ETF will be rejected.
Nate Geraci, President of ETF Store Said Coinbase is now “fully committed” to supporting the Spot Ether ETF, with conflict between crypto exchanges and regulators ahead of ETH ETF decision deadline of May 23rd This suggests that the situation may soon intensify.
“None of this is about 'investor protection,' it's all about politics. Sad. This is all sour grapes considering investors want exposure to spot Bitcoin ETFs.” Geraci said in a follow-up post.
Geraci added that it was clear that the SEC was preparing to reject the pending Ether ETF application due to correlation, but noted that it had approved the Ether Futures ETF.
Related: BlackRock Bitcoin ETF sets daily volume record as BTC recovery slows
In a March 11 letter to SEC Chairman Gary Gensler, two Democratic senators, Jack Reed and LaFonza Butler, wrote that if future crypto ETFs are approved, investors will It said it would be exposed to risks stemming from a “scarcely traded” market where fraud and manipulation are rampant.
In addition to a series of calls for stricter regulatory oversight of Bitcoin ETFs, Reid and Butler added that crypto markets smaller than Bitcoin are “much more exposed to fraud.”
There are currently eight proposed Spot Ether ETF applications awaiting SEC approval, and there is hope that other altcoins may eventually follow a similar path.
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