Cease the Anti-Ethereum ETF Campaign: ETH Exhibits More Liquidity than Majority of S&P 500 Stocks
Some lawmakers in the United States have expressed their displeasure at the rapid success enjoyed by spot Bitcoin ETFs within just two months of their launch. Senators Reed and Butler recently wrote to the U.S. Securities and Exchange Commission (SEC), urging them to refrain from approving additional Exchange-Traded Products (ETPs) for alternative tokens other than Bitcoin. While not explicitly stated, this could be seen as an attempt to prevent the approval of the spot Ethereum ETF that has been 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 Exhibits More Liquidity Than Most S&P 500 Stocks
Paul Grewal, Chief Legal Officer at Coinbase, respectfully responded to the senators, providing evidence that contradicts their assertions. He highlighted that their analysis had been shared with SEC staff and offered to discuss it with them or any other policymakers seeking clarification.
Grewal emphasized that many digital asset commodities, including Ethereum, have market quality metrics that surpass even the largest traded equities. For example, Ethereum’s spot market boasts depth and liquidity, with only two S&P 500 stocks having higher notional dollar trading volumes. Additionally, only one S&P 500 stock has lower adjusted bid-ask spreads than ETH.
When compared to Bitcoin, Grewal pointed 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.
Anthony Sassano, a prominent Ethereum contributor, argued that irrespective of personal feelings towards Ethereum or the desire for it to have an ETF, individuals should oppose the senators’ campaign. He highlighted that many policymakers view all cryptocurrencies as the same entity, which could result in the implementation of unfavorable policies affecting the entire crypto industry. Sassano emphasized the importance of advocating against such actions to prevent detrimental outcomes for all cryptocurrencies, regardless 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 Holds Potential to Outpace Bitcoin ETFs
Despite the growing pressure from lawmakers, recent optimism surrounding spot Ethereum ETFs remains. In fact, VanEck published a report on March 14, stating that spot Ether ETFs could potentially be even bigger than Bitcoin ETFs. VanEck Portfolio Manager Pranav Kanade remarked:
“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 go 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 mechanism, ETH holders can earn yields by staking their tokens on the blockchain. Coinbase currently offers a yield of around 3% for ETH stakers. However, the approval for spot ETH products by the SEC remains uncertain. Bloomberg analysts currently estimate a 30% chance of approval, while Kanade suggests it’s closer to 50%.