Coinbase Wants SEC to Approve Spot ETH ETF

Coinbase has called on the Securities and Exchange Commission (SEC) to list Gray Tone Ethereum. According to the company’s chief legal officer Paul Grewal, it needs to gain trust for trading.

Grewal announced in his statement at X that Coinbase responded to the SEC’s request for comment. He stated that Coinbase provided the “legal, technical, and economic rationale” necessary for approval.

He also said “Our letter reveals a thing that everyone who shows the slightest interest in the subject knows: ETH is not a security. In fact, before and after the merger, the SEC, CFTC, and market, did not treat ETH as a security. It’s a commodity, not a security.”

Analysts predict that the SEC will approve spot Ethereum ETFs as early as this May. Last October, Grayscale and NYSE Arca applied to convert the Grayscale Ethereum trust into a spot ether ETF.

Many companies, including giants like BlackRock and Fidelity, have also applied for spot ether ETFs. Some of these applicants aim to earn additional return by staking the underlying ether.

Investing in spot ether ETFs will allow investors to bet on the price of the second-largest cryptocurrency by market value without having to buy the underlying asset themselves.

Spot ETH ETF Should Be Approved

In a letter shared by Grewal at X, he claimed that the SEC’s approval of spot bitcoin ETFs is equally and in some respects more valid for the listing and trading of Grayscale’s spot ether ETF.

In the letter written by Coinbase to the regulator, “ The market depth of ETH, the tightness of spreads, and the price correlation between spot markets are indicators of a market that is highly resistant to fraud and manipulation.” He said. “The conceptual dollar transaction volume of ETH, including when adjusted relative to the total market value, is significantly higher than the majority of the stocks that make up the S&P 500.”

Approval of Spot ETH ETF could provide significant benefits to Coinbase’s custody business.

S&P Global Ratings analysts Andrew O’Neill and Alexandre Birry said, “Coinbase serves as a custodian in eight of the recently approved 11 US Bitcoin ETFs and is named as a staking institution by three of the four largest ETH Staking ETFs outside the US.”