Grayscale and Coinbase, two major crypto firms, recently had a meeting with officials from the United States Securities and Exchange Commission (SEC) to discuss a potential rule change for the launch of spot Ether exchange-traded funds (ETFs).
Grayscale is looking to convert its Ethereum Trust, which tracks the market price of Ether (ETH), into an ETF, following the successful conversion of its Bitcoin Trust into an ETF earlier this year. The meeting, which took place on March 6, focused on addressing concerns about potential market manipulation if the fund is approved.
Coinbase presented an argument during the meeting, stating that the same reasoning that led to the approval of Bitcoin ETFs should be applied to Ether. They highlighted the mechanisms in place that significantly limit ETH’s vulnerability to fraud and manipulation. Coinbase also mentioned their surveillance-sharing agreement with the Chicago Mercantile Exchange (CME), which was implemented for Bitcoin ETFs at the SEC’s request to enhance trading monitoring.
Nate Geraci of ETF Store pointed out the correlation between Ether futures and spot markets, similar to the Bitcoin market, and questioned the grounds for disapproving spot Ether ETFs when the SEC has already approved CME-traded Ether futures ETFs.
In addition to the spot ETF, Grayscale is also proposing a second ETF for Ether futures trading. The main difference between spot and futures markets is that spot market assets are traded immediately, while futures market contracts are made for buying or selling assets at a future date for a predetermined price.
There is speculation that Grayscale may be using its futures ETF application as a strategy to persuade the SEC to approve its spot Ether ETF. Several asset managers, including Invesco, Galaxy Digital, Fidelity, Franklin Templeton, and BlackRock, are also seeking approval for a spot Ether ETF. The SEC is expected to make a decision by May.
Eric Balchunas from Bloomberg believes that asset managers are still uncertain about regulators’ stance on crypto investment vehicles. He noted that the SEC has not provided any comments to issuers, which is concerning as they had done so for Bitcoin ETFs.
In conclusion, the discussion surrounding spot Ether ETFs continues to unfold, with various firms seeking approval and presenting their arguments to the SEC. The final decisions are expected in May, and the outcome will greatly impact the future of Ether as an investment vehicle.