Concerns regarding the transformation of Grayscale’s Ethereum Trust into a spot ETF were discussed during a meeting between Coinbase and the SEC on March 6.
In order to explore a regulation change for the introduction of spot Ether exchange-traded funds (ETFs), representatives from the US Securities and Exchange Commission (SEC) recently met with cryptocurrency businesses Grayscale and Coinbase.
Like as it did with its Bitcoin Trust in January, Grayscale is attempting to turn its Ethereum Trust, which tracks the market price of Ether, into an exchange-traded fund (ETF). After the proposal’s comment period ended on March 6, a meeting was organised to discuss concerns about potential market manipulation should the fund be approved.
Coinbase said that since Ether contains “mechanisms that significantly limit ETH’s susceptibility to fraud and manipulation,” the same justification that led to the approval of Bitcoin ETFs should also apply to Ether, according to a presentation given by the SEC.
The agreement between Coinbase and the Chicago Mercantile Exchange (CME) for surveillance sharing is the subject of another presentation point. The SEC requested the implementation of the mechanism for Bitcoin ETFs in order to enhance trade oversight.
Nate Geraci of ETF Store on X pointed out that Coinbase also highlighted the similarity between Ether futures and spot markets to the Bitcoin market. “I’m not sure what the grounds would be for disapproval of spot Ether ETFs, especially considering that the SEC approved CME-traded Ether futures ETFs.”
Additionally, Grayscale is putting up a second ETF for Ether futures trading. In the futures market, contracts are formed to buy or sell assets at a certain price at a future date, while in the spot market, commodities are traded instantly. This is the primary distinction between the two markets.
Grayscale’s potential use of their futures ETF application as a “trojan horse” to pressure the SEC into approving its spot Ether ETF has been raised by several experts.
The approval of a spot Ether ETF is being sought by a number of asset managers, including Invesco, Galaxy Digital, Fidelity, Franklin Templeton, and BlackRock. May is anticipated to be the final deadline for an SEC ruling.
Regulators’ opinions on the cryptocurrency investment vehicle, according to Eric Balchunas of Bloomberg, are still unknown to asset managers. In a normal situation, I would think this was [a] positive indicator, but as far as I’m aware, the Staff hasn’t remarked to the issuers yet, which is concerning because we’ve already had comments from them on BTC ETFs