The success of spot Bitcoin ETFs within just two months of launch has clearly irked some lawmakers in the U.S. On Thursday, March 14, Senator Reed and Senator Butler wrote to the U.S. Securities and Exchange Commission (SEC) urging them to refrain from approving additional Exchange-Traded Products (ETPs) for alternative tokens beyond Bitcoin. Indirectly, the lawmakers have been pushing the SEC to deny the spot Ethereum ETF that has been recently under consideration.
The success of the BTC spot products clearly ruffling some feathers on the Hill. @SenatorJackReed and @Senlaphonza write to the @SECGov urging:
-no further ETPs for other tokens
-make life difficult (i.e. examinations/reviews) for brokers and advisers that recommend BTC ETPs pic.twitter.com/enxdumC02N— Alexander Grieve (@AlexanderGrieve) March 14, 2024
ETH Is More Liquid Than Most S&P 500 Stocks
Paul Grewal, Chief Legal Officer at Coinbase, respectfully responds to Senators, providing evidence that contradicts their assertions. He highlights that their analysis has been shared with SEC staff and offers to discuss it with them or any other policymakers seeking clarification.
Grewal emphasizes that many digital asset commodities, not limited to Bitcoin, exhibit market quality metrics that surpass even the largest traded equities. For instance, Ethereum’s (ETH) spot market is characterized by depth and liquidity, with only two S&P 500 stocks boasting higher notional dollar trading volumes. Moreover, only one S&P 500 stock has lower adjusted bid-ask spreads than ETH.
Courtesy: Paul Grewal
In comparison to Bitcoin, Grewal points out that ETH’s futures and spot markets demonstrate the same high and consistent correlation, which facilitates market surveillance. This underscores the robustness and reliability of Ethereum’s market infrastructure.
Leading Ethereum contributor Anthony Sassano argues that regardless of personal feelings towards Ethereum (ETH) or the desire for it to have an ETF, individuals should oppose this development. He highlights that many policymakers view all cryptocurrencies as the same entity, leading to potential implementation of unfavorable policies affecting the entire crypto industry. Sassano emphasizes the importance of advocating against such actions to prevent detrimental outcomes for all cryptocurrencies, irrespective of personal preferences.
Even if you hate ETH and don’t want to see it get an ETF, you should be pushing back on this
“Crypto” is all in the same bucket for these boomers so they will treat it as such and try to advance really bad policy around all of crypto – not just the coins you personally hate https://t.co/RW86D1YmE2
— sassal.eth/acc 🦇🔊 (@sassal0x) March 15, 2024
Spot Ethereum ETF Can Outpace Bitcoin ETFs
As recently reported, the optimism surrounding the spot Ethereum ETFs has been waning amid the pressure from the lawmakers. However, VanEck published a report on Thursday, March 14, stating that spot Ether ETFs could be actually bigger than Bitcoin ETFs. VanEck Portfolio Manager Pranav Kanade said:
“From a market perspective, part of me believes that the market size for a spot ETH ETF is potentially as big if not bigger than the spot bitcoin ETFs. The world of investors who are looking for cash producing assets is massive and ETH obviously generates fees that goes to the token holders. Even if you don’t have an ETF that can offer staking as a part of it, it’s still a cash producing asset, so I think ETH could make more sense as an asset to more people than Bitcoin does.”
With Ethereum’s Proof of Stake, ETH holders can earn yield by staking on the blockchain. Coinbase offers around a 3% yield for ETH stakers. However, SEC approval for spot ETH products is uncertain. Bloomberg analysts now estimate a 30% chance, while Kanade suggests it’s closer to 50%.
