Coinbase has answered the SEC request for comments on the proposed rule change to list the ETH Grayscale Fund as a spot ETF. Coinbase stated that ether was a commodity, and its status has been publicly recognized in a variety of circumstances by U.S. agencies and courts.
Coinbase on Grayscale Ethereum Spot ETF Application: 'ETH Is a Commodity, Not a Security'
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Coinbase Supports Ethereum Grayscale Fund Conversion as a Spot ETF, States ETH Is a Commodity
Coinbase, the leading cryptocurrency exchange in the U.S., has answered the U.S. Securities and Exchange Commission (SEC) request for comments on the proposed rule change to list the Ethereum Grayscale Fund as a spot exchange-traded fund (ETF), supporting the conversion of the fund.
In a letter directed to the commission, the exchange explained that this listing should be approved for “virtually identical reasons” articulated by the institution concerning the approval of the listing of bitcoin spot ETF products. The exchange affirmed that the proposal was well filed as a commodity-based trust share, given the characteristics of its underlying asset.
On this, Coinbase stated:
ETH is a commodity, not a security.
According to Coinbase, ETH commodity status has been publicly recognized in several opportunities, like in the Commodity Futures Trading Commission (CFTC) regulation of ether futures, statements of commission officials, and rulings of federal courts. The exchange remarked that the SEC has never taken the position that ETH is a security, allowing the CFTC to approve ETH futures to be listed in markets like the Chicago Mercantile Exchange (CME).
Coinbase also referred to the solidity of the Ethereum blockchain, stressing that the tech and operational mechanisms in the protocol limited its susceptibility to fraud and manipulation. The state of ETH’s spot market also shows that ETH is a resilient asset, Coinbase argued, explaining that ether’s spot trading volumes were “significantly greater” than most S&P500 stocks.
Paul Grewal, CLO of Coinbase, added that the exchange remains committed to “supporting innovation and fostering a transparent, secure, and inclusive financial ecosystem through continued dialogue and research for informed regulatory decisions.”
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