Grayscale and Coinbase’s SEC Meeting on Spot Ether ETF

Two leading cryptocurrency firms, Grayscale and Coinbase, have met with officials from the United States Securities and Exchange Commission (SEC) to discuss the possibility of launching spot Ether exchange-traded funds (ETFs). Grayscale is particularly interested in converting its Ethereum Trust, which currently tracks the market price of Ether, into an ETF, following the successful conversion of its Bitcoin Trust in January. The meeting, which took place on March 6, addressed concerns about potential market manipulation if the fund were to be approved. In their presentation to the SEC, Coinbase argued that the same reasoning that led to the approval of Bitcoin ETFs should be applied to Ether, highlighting the token’s mechanisms that help limit susceptibility to fraud and manipulation. Coinbase also emphasized its surveillance-sharing agreement with the Chicago Mercantile Exchange (CME), which was implemented to enhance trading monitoring for Bitcoin ETFs. Nate Geraci of ETF Store pointed out that the correlation between Ether futures and spot markets, similar to the Bitcoin market, further supports the case for approving spot Ether ETFs. Grayscale has also proposed a second ETF for Ether futures trading, which differs from spot markets in that assets are traded immediately as opposed to contracts made for future dates. Analysts have suggested that Grayscale may be using its futures ETF application as a strategy to persuade the SEC to approve its spot Ether ETF. Several prominent asset managers, including Invesco, Galaxy Digital, Fidelity, Franklin Templeton, and BlackRock, are also seeking approval for spot Ether ETFs. The SEC is expected to make a decision by May, and many asset managers are still unsure about the regulators’ stance on crypto investment vehicles. Bloomberg’s Eric Balchunas expressed concern over the lack of comments from the SEC to the issuers, as this differs from their approach when considering Bitcoin ETFs.