Coinbase may benefit as SEC approves ETH ETF rule changes
Coinbase chief policy officer Faryar Shirzad discusses the impact of the custodianship on 'The Claman Countdown.'
The timing for when exchange-traded funds (ETFs) tied to the cryptocurrency ether can begin trading depends largely on how quickly issuers respond to the U.S. Securities and Exchange Commission's queries, Chair Gary Gensler said on Wednesday.
The SEC last month approved applications from Nasdaq, CBOE and NYSE to list spot ether ETFs. It was a surprise win for the cryptocurrency industry, which had expected the SEC to reject the filings after discouraging meetings with the regulator.
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The seal of the U.S. Securities and Exchange Commission is being displayed on a smartphone, with Bitcoin visible on the screen in the background, in this photo illustration taken in Brussels, Belgium, on January 9, 2024. (Photo Illustration by Jonathan Raa/NurPhoto via Getty Images / Getty Images)
The SEC still has to approve the ETF issuers' registration statements detailing investor disclosures before they can start trading. That process usually involves a lot of back and forth between the ETF issuers and SEC officials.
"These registrants are self-motivated to be responsive to the comments they get, but it's really up to them how responsive they are," he said. Gensler declined to say whether he thought that process would take weeks or months.
Gensler and agency officials had not commented previously on why the SEC appeared to do a U-turn and approve the ether exchange filings.
On Wednesday, Gensler said last year's court challenge brought by Grayscale Investments which forced the SEC to approve spot bitcoin ETFs in January had influenced its thinking on the ether products.
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Grayscale successfully argued that because the SEC previously approved ETFs tied to bitcoin futures it should also approve spot bitcoin ETFs, since bitcoin futures prices are highly correlated with spot prices.
A bitcoin symbol is seen at the Exchange ETF Conference in Miami Beach, Florida, in February 2024. (Gxstocks / Fox News)
Gensler said the cases are similar, since ethereum futures have been trading since last year. SEC staff "looked at these (ether) filings, looked at the various correlations... the correlations are relatively similar to the correlations in the bitcoin space," Gensler said.
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After the court ruled last year in Grayscale's favor, the SEC approved spot bitcoin ETFs in January. Gensler in a statement at the time acknowledged the court's decision, adding he felt that approving the products was "the most sustainable path forward."
A neon sign indicates that Bitcoin is accepted inside the venue of the Paralelni Polis project, an organization combining art, social sciences and modern technology, in Prague, Czech Republic, on Friday, Jan. 5, 2024. Bitcoin has been on a tear ahead (Milan Jaros/Bloomberg via Getty Images / Getty Images)
The SEC had for a decade rejected bitcoin ETFs. "Courts ruled otherwise. We adjusted," Gensler said.
Still, he added he continues to see the crypto space as "rife with fraud and scams and conflicts."
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