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Coinbase Chief Lawyer Urges SEC to Greenlight Ethereum ETFs
In a significant move towards cryptocurrency mainstream adoption, Paul Grewal, the Chief Legal Officer of Coinbase, has publicly called on the Securities and Exchange Commission (SEC) to approve applications for Ethereum Exchange-Traded Funds (ETFs). Grewal’s statements, made through a post on X, emphasize the lack of substantial reasons for the SEC to deny such applications.
Ethereum’s Widespread Adoption and Regulatory Status
Since its inception in 2015, Ethereum has seen widespread adoption among millions of Americans, becoming a cornerstone of the cryptocurrency ecosystem. Grewal pointed out that both the Commodity Futures Trading Commission (CFTC) and federal courts have consistently recognized Ethereum as a commodity, not a security. This classification aligns with statements from SEC officials, including a 2018 speech by the agency’s then-director of corporate finance, William Hinman, and remarks by SEC Chair Gary Gensler before his commission appointment.
The Howey Test and Ethereum ETFs
Grewal highlighted the importance of the Howey test, which is used to determine what constitutes a security. He argued that Ethereum’s compliance with this test, alongside its listing on CFTC-regulated futures exchanges since 2021, demonstrates a clear regulatory path for approving spot Ethereum ETFs. The chief lawyer criticized the SEC’s hesitance as contradictory to long-standing precedents and harmful to investor confidence.
Call to Action Amid Regulatory Hurdles
The push for Ethereum ETFs comes at a time when the SEC has postponed its decision on a specific ETF application by VanEck, extending the review period and seeking public comments until May 23. Grewal’s comments reflect a broader sentiment within the financial and cryptocurrency industries, advocating for regulatory clarity and the approval of digital asset-based investment products. Companies like Franklin Templeton, BlackRock, Fidelity, and Invesco, in partnership with Galaxy, are also vying to launch Ethereum-based ETFs, indicating a growing interest in cryptocurrency investments among traditional financial institutions.
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