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Paul Grewal, Coinbase's chief legal officer, has strongly criticized a letter from two United States senators urging the Securities and Exchange Commission (SEC) to impose stricter regulations on Bitcoin ETFs and reject further crypto ETF applications.
In a post on X dated March 15, Grewal voiced his disagreement with the senators' letter, issued on March 11, and warned against approving additional crypto ETFs beyond Bitcoin, citing significant risks to investors. Grewal argued that the available evidence contradicts the senators' concerns.
"Respectfully, Senators, the evidence points exactly the opposite way," Grewal said in response to the letter.
Response to Senators' Letter
He elaborated that several cryptocurrencies, particularly Ether, exhibit quality metrics surpassing even those of the largest traded equities. Grewal highlighted the depth and liquidity of Ether's spot market, emphasizing that only two stocks in the S&P 500 have higher notional dollar trading volumes than Ether.
Arguments for Ether ETFs
Grewal also pointed out direct evidence suggesting that Ether's futures and spot markets are equally correlated with Bitcoin's. He referenced a meeting held on March 9 between Coinbase, Grayscale, and SEC officials. Coinbase advocated for the approval of spot Ether ETFs, citing the precedent set by Bitcoin ETF approvals.
Additionally, industry analysts have speculated that Grayscale's futures ETF application may be a strategic maneuver to influence the SEC's decision on spot Ether ETFs.
Potential Regulatory Conflict
Nate Geraci, president of the ETF Store, remarked that Coinbase's strong support for spot Ether ETFs indicates a potential conflict with regulators, especially with the looming deadline for an ETH ETF decision on May 23.
According to Coin Telegraph, Geraci observed that while the SEC seems inclined to reject pending Ether ETF applications based on correlation concerns, they have approved Ether futures ETFs.
Based on a Coingape report, the lawsuit filed by Coinbase is just one aspect of a larger discourse within the cryptocurrency industry and among regulators regarding the most effective approach to regulating this rapidly expanding sector.
In their letter to SEC Chair Gary Gensler, Senators Jack Reed and Laphonza Butler expressed apprehensions about the risks associated with thinly traded crypto markets. They called for enhanced regulatory oversight, particularly for cryptocurrencies other than Bitcoin.
Eight spot Ether ETF applications await SEC approval, raising hopes for similar paths for other altcoins in the future.
Photo: Michael/Unsplash
