Paul Grewal, chief legal officer at Coinbase, criticized a letter written by two US senators calling on the Securities and Exchange Commission (SEC) to impose stricter regulations on Bitcoin exchange-traded funds and refrain from approving any further applications for cryptocurrency ETFs.
In a March 15 thread, he disputes the claims of Senators Jack Reed and Laphonza Butler and defends the need to expand the ETF market to include assets other than Bitcoin.
Grewal advocates for Ethereum ETFs
“With all due respect, senators, the evidence shows exactly the opposite,” he said.
With all due respect, Senators, the evidence shows exactly the opposite. We have discussed our analysis with SEC staff and are happy to do the same for you and other decision makers who have questions. 1/7 https://t.co/juFj4QyDnj
— paulgrewal.eth (@iampaulgrewal) March 15, 2024
Grewal highlighted the solidity of various digital asset commodities beyond Bitcoin, citing Ethereum (ETH) as an example, stating that its market liquidity and metrics rival even those of major S&P 500 stocks.
He emphasized that Ethereum exhibits exactly the same level of strong and consistent correlation that is suitable to enable market surveillance compared to Bitcoin, both in its future and spot markets.
The Coinbase executive also addressed the recent comment letter submitted to the SEC, providing the legal, technical and economic rationale for approving the Ethereum Exchange-Traded Product (ETP).
Senator’s letter
In their March 11 letter, Democratic Senators Jack Reed and Laphonza Butler opposed the SEC’s continued approval of crypto ETFs, warning of the risks posed to investors by thinly traded markets susceptible to fraud and manipulation.
“Retail investors would be exposed to enormous risk from ETPs that reference low-volume cryptocurrencies or cryptocurrencies whose prices are particularly susceptible to pump-and-dump methods or other fraudulent schemes,” the letter reads.
The senators stressed the need for caution, calling on the SEC to refrain from allowing recent approvals of Bitcoin cash ETFs to set a precedent for future ones, citing BTC’s relatively established and researched market compared to other cryptocurrencies.
🚨NEW: Senator from Rhode Island @SenJackReed and California senator @Senlaphonza wrote a letter to @GaryGensler asking the agency to step in to ensure that broker-dealers provide investors with appropriate market information $BTC ETFs (which they say should be recommended accordingly… pic.twitter.com/xwlfu7kx3F
— Eleanor Terrett (@EleanorTerrett) March 14, 2024
Reed and Butler also called for increased regulatory scrutiny of Bitcoin ETF cash products, calling for specific steps to protect investors’ interests, including increased oversight of brokers and advisors.
They expressed doubts about the suitability of other cryptocurrencies to support related ETPs, citing insufficient trading volumes and market integrity. They also questioned the likelihood that futures markets for other cryptocurrencies would show the necessary correlation with spot markets to facilitate effective market surveillance to identify and prevent bad actors.
The SEC is currently reviewing eight proposed Ethereum spot ETF applications, anticipating that other altcoins may follow suit in the future.
Binance Free $100 (Exclusive): Use this link to sign up and get $100 free and 10% off your first month of Binance Futures fees (conditions).