Coinbase Legal Officer Advocates for Ethereum ETF Approval

The Securities and Exchange Commission (SEC) is facing mounting pressure to greenlight Ethereum-based exchange-traded funds (ETFs), asserts Paul Grewal, Chief Legal Officer at Coinbase.

Grewal contends that the SEC’s historical treatment of Ethereum as a commodity rather than a security offers a compelling case for approving Ethereum ETF applications. He underscores the consistent classification of Ethereum as a commodity by both the Commodity Futures Trading Commission (CFTC) and federal courts over several years.

Supporting Statements from SEC Officials

Citing statements from SEC Director of Corporate Finance, William Hinman, made in 2018, and Chair Gary Gensler’s previous remarks, Grewal reinforces the stance that Ethereum does not fit the definition of a security.

Grewal highlights Ethereum’s compliance with the Howey test criteria, which defines securities, and its listing on CFTC-regulated futures exchanges since 2021. He warns against introducing unnecessary hurdles to approving Ethereum ETFs, emphasizing the potential impact on 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 statements come after the SEC decided to request public comments and postpone the decision on VanEck’s Ethereum ETF proposal until May 23. Similar suggestions have led to prior postponements, which are echoed in this one.

The competition to introduce Ethereum-based exchange-traded funds (ETFs) is being led by notable players including Franklin Templeton, BlackRock, Fidelity, and Invesco with Galaxy, indicating a rising appetite for financial products based on cryptocurrencies.