The SEC has no compelling reason to reject applications to launch an Ethereum ETF, says Coinbase chief legal officer Paul Grewal.
In his X post, Grewal revealed vital facts about Ethereum, highlighting its widespread adoption among millions of Americans since its inception in 2015 and its integral role in the cryptocurrency ecosystem.
Sigh… again with the ETH misinformation as we await a decision on ETH ETPs. Ok–let’s talk about some basic facts about Ethereum. Millions of Americans hold ETH; it has been vital to crypto since its 2015 launch; and ETH is a commodity, not a security. 1/10
— paulgrewal.eth (@iampaulgrewal) March 20, 2024
According to the Coinbase lawyer, the SEC has treated Ethereum (ETH) as a commodity, not a security, for many years. The CFTC and federal courts have unanimously confirmed that the asset has this status.
Coinbase‘s lawyer referred to statements made by the agency’s director of corporate finance, William Hinman, in 2018. He also recalled SEC Chair Gary Gensler’s speech in front of Congress before he was appointed head of the commission. In his remarks, Gensler took a similar position.
Grewal stressed that Ethereum needs to meet the criteria of the Howey test, which defines securities. He pointed to consistency in the asset’s oversight, including its listing on CFTC-regulated futures exchanges starting in 2021.
In light of the established regulations, Grewal urged the SEC not to create unnecessary barriers to approving spot Ethereum ETFs. He emphasized that doubts about ETH’s regulatory status contradict a long-standing precedent and could undermine investor confidence.
“Digital assets like ETH that do not involve an ongoing contractual obligation related to a business enterprise are not “investment contracts” or otherwise “securities.”
Paul Grewal, Coinbase chief legal officer
Grewal’s comment came in response to the regulator’s decision on March 20 to postpone the verdict on VanEck’s Ethereum ETF application. The department has extended the review period until May 23 and asked for public comments. Previously, the Commission came to similar conclusions based on similar proposals.
Franklin Templeton, BlackRock, Fidelity, and Invesco with Galaxy are also participating in the race to launch an ETF based on ETH.