As the crypto market lateralizes, many rumors are circulating around spot Ethereum ETFs. Coinbase’s General Counsel criticizes this misinformation, but the crypto community is still awaiting a decision from the regulator regarding the approval of Ethereum ETFs.
SEC would have no reason to reject Ethereum spot ETF applications
Following the approval of spot Bitcoin ETFs in the USA, many are speculating about the next episode: the potential approval of spot Ethereum ETFs. Paul Grewal, Coinbase’s General Counsel, has stated that the US regulator has no valid reason to reject ETF applications.
“Once again, we’re seeing a lot of misinformation around Ether (ETH) as we all await a decision on ETF approval. Millions of Americans hold ETH, it has been vital to the industry since its launch in 2015 and ETH is a commodity, not a financial security.”
Paul Grewal goes on to argue that the SEC has taken a favorable stance on ETH’s status for years. Some officials, such as former CFO Bill Hinman, had suggested in 2018 that ETH was not a financial security. That same year, before becoming SEC chairman, Gary Gensler had also testified before Congress that Ether was not a financial security.
How do you define the legal status of Ether (ETH)?
According to Coinbase’s legal director, there are many arguments against classifying ETH as a financial security:
- The latest comparisons between ETH and Bitcoin by SEC lawyers in the case against Ripple Labs ;
- Confirmation by the Commodity Futures Trading Commission and the federal courts that ETH is a commodity;
- ETH futures contracts that began trading on CFTC-regulated derivatives exchanges in 2021.
For Paul Grewal, the SEC has no valid reason to reject applications for spot ETFs on Ethereum. He hopes it won’t try to invent one by questioning ETH’s long-established regulatory status, which the SEC has repeatedly approved. For him, this is not how the law works and the American people deserve better regulation.
For the time being, the SEC’s Howey test does not determine the status of ETH either. This is because digital assets that do not involve an ongoing contractual obligation linked to a commercial enterprise are not investment contracts or financial securities in the broadest sense. Even if the test were applied, ETH would not meet it anyway.
David Crypto
