Coinbase-Funded Reps in Congress Urge SEC to Approve Ethereum ETFs
The cryptocurrency exchange is expected to be a major beneficiary if the Security and Exchange Commission approves pending applications for Ether ETFs.
In a stunning reversal, the Securities and Exchange Commission (SEC) is expected to approve applications for exchange-traded funds (ETFs) that track the price of Ether, effectively allowing investors to transact in the cryptocurrency on traditional stock exchanges.
Earlier this week, Bloomberg analysts James Seyffart and Eric Balchunas increased their odds of the ETFs being approved from 25% to 75%. “Hearing chatter this afternoon that SEC could be doing a 180 on this (increasingly political issue), so now everyone scrambling (like us everyone else assumed they'd be denied),” Balchunas wrote on X.
The SEC approved Bitcoin ETFs in January, but industry observers had been growing increasingly pessimistic about the chance for Ether ETFs to be approved because the agency had not been communicating with the companies that had applied for them. SEC Chairman Gary Gensler had in the past said that he believed Ether and so-called altcoins to be unregulated securities. Ether, the second-largest cryptocurrency by market valuation, is the cryptocurrency of the Ethereum blockchain.
Donald Shaw
To help push the ETFs across the finish line, this morning five members of the U.S. House of Representatives, a mix of Republicans and Democrats, sent Gensler a letter urging him to “maintain a consistent and equitable approach” to the Bitcoin ETF applications and approve the pending Ether ETFs.
The letter was led by French Hill (R-Ark.) and signed by Tom Emmer (R-Minn.), Mike Flood (R-Neb.), Josh Gottheimer (D-N.J.), and Wiley Nickel (D-N.C.). Hill is the chairman of the Subcommittee on Digital Assets, Financial Technology and Inclusion of the House Financial Services Committee, and Emmer is the third-ranking Republican on the panel.
We urge SEC Chair @GaryGensler to approve the pending Ether ETP applications. @GOPMajorityWhip @RepJoshG @USRepMikeFlood @WileyNickel
— French Hill (@RepFrenchHill) May 23, 2024
Check out our letter to @GaryGensler below: pic.twitter.com/uv8Sp8lqUx
“Specifically, the Commission should apply the same principles set forth in the approval of the spot bitcoin ETPs [exchange-traded products] as it evaluates the pending ether ETP applications as the legal considerations pertinent to bitcoin also apply to ether,” the lawmakers wrote. “With the Commission’s actions earlier this year, it seems a natural progression that would not only demonstrate consistency in the Commission’s application of its standards but would also affirm the legal reasoning that facilitated the spot bitcoin ETPs decision. We encourage the Commission to continue enabling and embracing financial innovation while ensuring the full protection of the federal securities laws for investors,”
Four of the signers of the letter have been among the top six recipients in the House of campaign funding in the 2024 election cycle from employees of Coinbase, the cryptocurrency exchange that has been selected to act as a custodian for several of the proposed ether ETFs.
According to The Information, “At least six out of the nine investment firms that plan to issue ether ETFs have picked Coinbase as a custodian, meaning the crypto company will safeguard ether for giants including BlackRock, Invesco and Franklin Templeton. Judging by the success of bitcoin ETFs, which launched in January, Coinbase could soon oversee billions of dollars worth of ether and entrench its position at the center of the crypto ETF boom.”
Hill has received more Coinbase money than any other House member so far this election cycle, according to OpenSecrets. Federal Election Commission records show that his campaign and leadership PAC have received a combined $35,600 from the company’s employees since the beginning of last year, including $11,600 from its CEO Brian Armstrong.
