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US senators push SEC to reject other crypto ETF proposals, casting doubt on Ethereum ETF approval chances – CryptoSlate

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Coinbase’s legal chief Paul Grewal said the SEC risks facing legal battles if it decides against approving Ethereum ETFs.
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The chances of approval for the pending spot Ethereum exchange-traded fund (ETF) applications this May are strained as two US Senators urged the Securities and Exchange Commission (SEC) to reject other crypto ETF proposals.
In the March 11 letter to SEC Chair Gary Gensler, Senators Jack Reed and Laphonza Butler advised the financial regulator to tighten its scrutiny of Bitcoin ETFs.
The lawmakers raised concerns about approving additional crypto ETFs beyond Bitcoin, citing potential risks for retail investors.
They argued that other cryptocurrencies, like Ethereum, lack sufficient trading volumes and integrity to support related ETPs. Additionally, they doubt that futures markets for these cryptocurrencies will closely correlate with spot markets, making it challenging to conduct effective market surveillance and prevent fraudulent activities.
They added:
“The SEC should strictly limit the precedential application of these approvals. While the bitcoin market has displayed serious weaknesses, it is nonetheless far more established and scrutinized than the market for any other cryptocurrency. However vulnerable Bitcoin may be to fraud and manipulation, markets for other cryptocurrencies are far more exposed to misconduct.”
As such, they concluded that the financial regulator should protect retail investors “from ETPs referencing thinly traded cryptocurrencies or cryptocurrencies whose prices are especially susceptible to pump-and-dump or other fraudulent schemes.”
The lawmakers’ letter arrived when Bloomberg analysts significantly lowered the probability of a spot Ethereum ETF approval to 35%.
Eric Balchunas, Bloomberg’s Senior ETF Analyst, suggested that the success of the Bitcoin ETFs might have unsettled some politicians, contributing to the pessimism surrounding the approval of spot ETH ETFs.
Paul Grewal, the legal chief at Coinbase, highlighted the potential for significant legal conflicts should the SEC decide to decline the pending Ethereum ETF applications.
Grewal stressed that numerous digital asset commodities, including Ethereum, boast market quality metrics surpassing even the most substantial traded equities.
According to him:
“When compared to bitcoin, ETH’s future and spot market demonstrate EXACTLY the same type of high and consistent correlation that would enable market surveillance.”
Consequently, Grewal argued that the SEC’s refusal of an Ethereum ETF application would be grounded in flawed reasoning, given the robust market performance exhibited by Ethereum and similar digital assets.
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Industry experts believe the odds of an Ethereum ETF securing approval in May have fallen significantly due to a lack of activity among relevant parties.
Disclaimer: Our writers’ opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate endorse any project that may be mentioned or linked to in this article. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own due diligence before taking any action related to content within this article. Finally, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.

Must-read crypto news & insights.
Ethereum is a decentralized, open-source blockchain platform that enables the creation of smart contracts and decentralized applications (DApps).
Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Coinbase is a digital currency exchange and wallet service that allows individuals to buy, sell, and store digital currencies, such as Bitcoin, Ethereum, and Litecoin.
Paul Grewal is the Chief Legal Officer of Coinbase where he is responsible for Coinbase’s legal, compliance, global intelligence, risk management and government relations groups.
Eric Balchunas is an American author, ETF analyst, and Senior ETF Analyst at Bloomberg Intelligence.
IntoTheBlock brings TRON network’s advanced analytics to millions for free, bolstering transparency and market insight.
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