America’s preeminent crypto exchange, Coinbase, met with the U.S. Securities and Exchange Commission (SEC) to discuss Grayscale’s proposed spot Ethereum (ETH) exchange-traded fund (ETF).

Coinbase’s Meeting With SEC

Publicly traded Coinbase had a sit-down with the SEC last week.

As per a presentation shared by the SEC on Wednesday, Coinbase attempted to assuage the financial regulator’s concerns about the safety of Grayscale’s proposed spot ether exchange-traded fund.

Grayscale submitted paperwork in October to transform its ETH trust (ETHE) into a spot market ETF. The product would trade on a stock exchange and give investors direct exposure to the industry’s second-largest cryptocurrency by market cap. A potential SEC approval would bolster ether’s appeal among more conservative institutional investors, just as the newish spot Bitcoin ETFs launched in January drew massive investor demand and even captured some capital from gold.

Coinbase argued during the presentation that the same reasoning that led to the greenlighting of BTC ETFs should be applied to ether because the token has “mechanisms that significantly limit ETH’s susceptibility to fraud and manipulation,” adding that “spot markets for ETH are highly indicative of a market resilient to fraud and manipulation.”

Coinbase further noted how it would have a “comprehensive surveillance-sharing agreement” with the Chicago Mercantile Exchange (CME), which would aid in “surveilling for fraud and manipulation.”

The exchange also stressed the correlation between Ether futures and spot markets, similar to the Bitcoin market, as pointed out by ETF Store president Nate Geraci on X. “Add-in that SEC approved CME-traded Ether futures ETFs and I’m not sure what grounds for disapproval of spot Ether ETFs would be.”

The talks come just two months after the SEC’s approval of 11 spot BTC ETFs, which propelled cryptocurrencies’ values to historic highs and boosted investors’ appetite for crypto investment vehicles. Grayscale was one fund manager that was given the nod to convert its flagship GBTC trust into a spot Bitcoin ETF.

Now, along with BlackRock, Fidelity, Invesco, Galaxy Digital, and Franklin Templeton, it is striving to secure approval from the regulator to introduce a spot ETH ETF, with a regulatory decision deadline approaching in May.

Standard Chartered Bank in January stated in a research report that it expected ether ETFs to get the SEC’s greenlight by May — and that the asset’s value could skyrocket as a result.

Ether Prepares For Fresh All-Time Highs

ETH hit $4,000 per coin on March 8 for the first time since December 2021. At publication time, it was changing hands at $3,903. ETH has advanced 12.6% over the past seven days, outshining BTC’s 10.8% gain. An approval could spur explosive growth for ether.

Besides potential ETFs, the upcoming key Dencun upgrade is also another tailwind for ETH. Following the update, enthusiasts expect a further 90% reduction in Ethereum layer 2 transaction costs, which will ease congestion on the mainnet and attract higher volumes to the ecosystem.

Viewed optimistically, a combination of spot ETH ETFs and Dencun could catapult ether toward a new lifetime high above $4,891.

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Filed under: Bitcoin - @ March 10, 2024 9:52 pm