SEC discusses Ethereum ETFs with Coinbase and Grayscale

U.S. Securities and Exchange Commission (SEC) officials recently held talks with Coinbase and Grayscale about upcoming Ethereum ETFs.
While Coinbase gave the financial regulator a presentation on the Ethereum ETF, Grayscale focused on the potential listing of the Grayscale Ethereum Trust on NYSE Arca.

Coinbase and Grayscale discuss Ethereum ETFs

According to Coinbase, shares of a potential Ethereum ETF would be classified as commodity stocks, similar to a Bitcoin ETF. The company emphasized that the Commission's rationale for approving Bitcoin spot ETFs would be just as strong, if not stronger, for Ethereum.
In addition, Coinbase cited data showing the robustness of Ethereum futures and spot markets comparable to Bitcoin.
Coinbase confirmed:
"As with bitcoin, a comprehensive exchange surveillance agreement with CME will help monitor fraud and manipulation."

Less than two weeks ago, Coinbase supported Grayscale's proposal to convert the Ethereum Trust into an ETF while ensuring Ethereum is classified as a commodity. A lawyer for the exchange said that the company has provided the SEC with the necessary legal, technical and economic justifications to approve the Ethereum-based ETF.
Paul Grewal, Coinbase's general counsel, said:
"The economics show that Ethereum is as robust as Bitcoin when it comes to meeting the Commission's standards for approving ETPs (exchange-traded products)."
Meanwhile, the initiative has sparked differing opinions in the cryptocurrency community, which speculates on the potential implications of the talks. ETF expert Nate Geraci pointed to a Coinbase analysis that showed a correlation between Ethereum futures and spot markets. However, Geraci expressed uncertainty about "what would be the rationale for abandoning spot ETH ETFs."
On the other hand, Eric Balchunas, senior ETF analyst at Bloomberg, expressed concern about the SEC's silence on pending applications, pointing to potential setbacks for applicants.
"Litigation doesn't go away. And the correlations between [Ethereum] futures and spot are not as strong [as in the case of bitcoin]," Balchunas added.
Nevertheless, Balchunas acknowledged that BlackRock's involvement offers a glimmer of hope. As the world's largest asset management company, BlackRock has played a key role in the approval of several bitcoin-ETFs. This indicates a positive precedent for pending applications.
Interestingly, cryptocurrency lawyer Scott Johnson stated that the meeting indicates "that the SEC is likely to approve/reject based on correlation."
The lawyer concluded:
"Why invite Coinbase to discuss their correlation analysis in front of actual issuers? I think it also underscores that if the SEC is considering a rejection they want to make sure they can parry comments that contradict their correlation analysis."