Coinbase Shows Support for Grayscale's Ethereum ETF Proposal

By: Eva Baxter

Coinbase, the top-tier digital asset exchange, has officially endorsed the bid of Grayscale, a digital currency asset manager, to transform its Ethereum Trust into an Ethereum exchange-traded fund (ETF). The backing was stated in a letter sent to the United States Securities and Exchange Commission (SEC) on February 21. With robust arguments on Ethereum's legal, technical and economic aspects, the letter stated its merits for a spot approval.

The announcement highlights the growing market anticipation for an Ethereum ETF, paralleling the enthusiasm around Bitcoin ETFs. Renowned asset management entities like BlackRock and Fidelity have also submitted applications for their Ethereum Spot ETFs.

Central to Coinbase's argument are five key points advocating for Ethereum ETFs. Primary among them is the fact that Ethereum is widely recognized as a commodity, backed by regulatory instances such as ETH futures regulated by the Commodity Futures Trading Commission (CFTC), transparency from commission officials, and federal court rulings.

The letter also cited Ethereum's Proof-of-Stake mechanism as a sturdy governance model, the high liquidity of spot trading, and Ethereum's substantial dollar trading volume, often outperforming many S&P 500 stocks.

In conclusion, Coinbase argued that endorsing the ETF proposal would align with SEC principles and provide a prudent regulatory outcome.