SEC should refrain from replicating the bitcoin ETF debacle with Ethereum
A Georgetown University professor wrote a letter to the Securities and Exchange Commission arguing that it should not “repeat the debacle of the bitcoin ETP horse race” with prospective spot Ethereum ETPs.
According to a letter dated April 5 from James J. Angel, an associate professor of finance at Georgetown University’s McDonough School of Business, Grayscale Investments has suggested turning its current over-the-counter Grayscale Ethereum Trust into an exchange-traded instrument.
“Futures-based ETPs on ethereum are already listed and traded on our exchanges,” Angel said in response to a proposed rule change allowing the listing and trading of shares of the Grayscale Ethereum Trust. “But, the SEC is holding up Grayscale’s request for no apparent reason.”
According to him, the approval procedure for proposed spot Ethereum ETPs is almost exactly like the one for spot Bitcoin ETPs. Regarding spot bitcoin ETPs, Angel stated that the SEC had authorised a futures-based product but had later objected to the approval of a nearly comparable spot-based product. According to the professor, he has no financial relationship to Grayscale or any other cryptocurrency companies, Pensions & Investments was informed.
He made reference to Grayscale Investments’ 2023 court victory over the SEC, saying, “It was quite painful to watch the SEC’s valiant attorneys attempt to defend such a weak case.”
The SEC “then had the good sense to cut its losses” following its overturning by the U.S. Court of Appeals for the District of Columbia Circuit, according to Angel’s letter. After that, according to Angel, the SEC “held its nose and let a plethora of spot-bitcoin ETPs trade all starting on the same day.”
The letter stated, “The dam has burst.” “A tsunami of spot-bitcoin-based ETPs has now emerged.”
Angel said that the SEC had not learnt from that experience.
“The SEC should again cut its losses and let the ethereum ETPs trade promptly and without fanfare, unless it wants to further damage its reputation and suffer yet another humiliating loss in the DC Circuit,” the letter stated.
The letter stated that the SEC could not “put the crypto genie back in the bottle” and that “pushing as much crypto activity as possible into the regulated sphere while strictly enforcing customer protection rules” would be the best way for the agency to carry out its mission of safeguarding investors, according to Angel.
According to him, the SEC started a “horse race” among Wall Street sponsors by authorising all of the spot bitcoin ETPs at once.
The letter stated, “On the same date as the innovators, firms who had not invested years of effort and large legal expenses were allowed to offer bitcoin ETPs.” “Many observers viewed this as a petulant move by a regulatory body meant to penalise Grayscale for the audacity to sue it and prevail in court.”
According to Angel, the horse race also let Wall Street use all of its marketing might to promote spot bitcoin ETPs.
The letter stated, “The SEC could not have designed a more dramatic way to push bitcoin if it had tried.” “There would not have been such a marketing rush, in fact, if the SEC had quietly allowed spot-bitcoin ETPs when they were first proposed.”