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Coinbase did not hold back about a letter that contained information which was pushing the SEC to hold any more crypto ETFs.
According to Paul Grewal, the chief legal officer of Coinbase the direct evidence shows that Ether’s futures and spot markets are as correlated as Bitcoin. This letter suggests that the recent letter by the US senators urging the SEC to regulate Bitcoin ETFs. In addition, rejecting any further crypto ETF applications is misguided.
In response to a letter from two US senators urging the SEC to regulate Bitcoin ETFs even more and reject any further crypto ETF applications, Coinbase chief legal officer Paul Grewal criticized the senator’s claims.
What Was in This Letter?
The letter, dated March 11, claimed that approving further crypto ETFs beyond Bitcoin would expose investors to “enormous risks”. Grewal said that the senators’ letter contained several falsehoods, and he argued that the evidence pointed in the opposite direction.
He explained that the market for many cryptocurrencies smaller than Bitcoin, notably Ether, demonstrated quality metrics that exceeded even the largest traded equities.
Grewal added that the spot market for Ether is deep and liquid, with only two S&P 500 stocks having higher notional dollar trading volume. Additionally, there was direct evidence that Ether’s futures and spot markets were just as correlated as Bitcoin’s.
The letter from the senators, Jack Reed and Laphonza Butler, claimed that approving any further crypto ETFs by the Securities and Exchange Commission would see investors exposed to thinly traded markets rife with fraud and manipulation.
However, there are currently eight proposed spot Ether ETF applications awaiting approval by the SEC, and there have been hopes that other altcoins could eventually walk the same path.
The Senators Urged the SEC to Hold the Approval
The SEC has been urged by the senators to avoid setting a precedent for further approvals of spot Bitcoin ETFs, citing concerns about the market’s recent weakness.
Moreover, they argued that while Bitcoin’s market has undergone serious scrutiny, it is more reliable and established than the market for smaller cryptocurrencies.
The SEC is under pressure to scrutinize Bitcoin ETF brokers and advisors. The success of spot Bitcoin ETFs is increasing political pressure on Gensler, making an Ether ETF approval in May less likely. Moreover, Both Butler and Reed have sponsored legislation to crackdown on cryptocurrency.
In addition to this, Coinbase and Grayscale met with SEC officials on March 9 to discuss a rule change for the launch of spot Ether ETFs. The SEC may reject pending ETH ETFs based on “correlation.” Some believe the SEC’s pushback on Ether ETFs is political, not intended to “protect investors.”
Summary
Coinbase has criticized a letter from Senators that claimed approving further crypto ETFs beyond Bitcoin would expose investors to ‘enormous risks’. Crypto industry pundit, Balchunas, said that the letter was evidence of mounting political pressure on Gensler, which makes an Ether ETF approval in May seem less likely.
Disclaimer
The views and opinions stated by the author or any people named in this article are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks, cryptos, or other related indexes comes with a risk of financial loss.
Steefan George is a crypto and blockchain enthusiast, with a remarkable grasp on market and technology. Having a graduate degree in computer science and an MBA in BFSI, he is an excellent technology writer at The Coin Republic. He is passionate about getting a billion of the human population onto Web3. His principle is to write like “explaining to a 6-year old”, so that a layman can learn the potential of, and get benefitted from this revolutionary technology.
