Coinbase’s chief legal officer, Paul Grewal, has strongly criticized a letter from two US senators urging the Securities and Exchange Commission (SEC) to tighten regulations on Bitcoin ETFs and reject any future crypto ETF applications. In response, Grewal stated that the senators’ claims about the risks associated with approving crypto ETFs were unfounded. He argued that smaller cryptocurrencies like Ether (ETH) have demonstrated superior quality metrics and that Ether’s spot market is deep and liquid, with trading volumes comparable to major stocks. Grewal also highlighted the strong correlation between Ether’s futures and spot markets, similar to Bitcoin’s correlation. On March 9, Coinbase and Grayscale met with SEC officials to discuss the launch of spot Ether ETFs. Analysts speculate that Grayscale may be using its futures ETF application as a strategy to gain approval for a spot Ether ETF. Some industry experts predict that the SEC will reject pending ETH ETFs based on concerns about correlation between spot and futures prices. Nate Geraci, president of the ETF Store, suggests that Coinbase is fully committed to supporting spot Ether ETFs, potentially leading to a conflict with the regulator. Geraci believes that the SEC’s pushback on Ether ETFs is politically motivated rather than driven by investor protection. He argues that investors are seeking exposure to spot Bitcoin ETFs, which the SEC has not yet approved. In their letter to SEC Chair Gary Gensler, Senators Reed and Butler expressed concerns about the risks associated with thinly traded markets and potential fraud and manipulation in cryptocurrencies smaller than Bitcoin. They called for stricter regulatory oversight of Bitcoin ETFs and highlighted the greater exposure to misconduct in smaller cryptocurrencies. Currently, there are eight spot Ether ETF applications awaiting SEC approval, and there is hope that other altcoins may follow a similar path.
Coinbase retaliates against senators' request to SEC, urging them to cease approving cryptocurrency ETFs.