tl;dr
Republican lawmakers, including Committee Chairs Patrick McHenry and Glenn Thompson, have requested clarification from SEC Chair Gary Gensler regarding the custody of Ethereum by Prometheum. They emphasized concerns over transparency in the SEC’s Special Purpose Broker-Dealer regime and urged clarif...
Republican lawmakers, including Committee Chairs Patrick McHenry and Glenn Thompson, have requested clarification from SEC Chair Gary Gensler regarding the custody of Ethereum by Prometheum. They emphasized concerns over transparency in the SEC’s Special Purpose Broker-Dealer regime and urged clarification on the regulatory classification of Ethereum. The lawmakers criticized Gensler's refusal to acknowledge Ethereum as a non-security digital asset and urged prompt action to address concerns and minimize uncertainty within the digital asset ecosystem.
In a joint effort, Republican lawmakers led by House Financial Services Committee Chair Patrick McHenry and House Agriculture Committee Chair Glenn Thompson have called upon SEC Chair Gary Gensler to provide further clarification on the agency’s stance regarding the custody of Ethereum (ETH) by Prometheum. The lawmakers, including Representatives French Hill, Dusty Johnson, Tom Emmer, and Warren Davidson, expressed concerns over the lack of transparency in the SEC’s Special Purpose Broker-Dealer (SPBD) regime and the potential ramifications of allowing Prometheum to proceed with its custody services for Ethereum.
Recognizing Ethereum as a non-security digital asset, the lawmakers emphasized the SEC and Commodity Futures Trading Commission’s previous recognition of Ethereum as a non-security digital asset. They noted that the SEC’s current regulatory framework does not permit Special Purpose Broker-Dealers to custody non-security digital assets, warning that allowing Prometheum to proceed under these circumstances could have “irreparable consequences” for the digital asset markets. The letter further raised concerns about the lack of a clear definition for “digital asset securities” and the SEC’s failure to provide comprehensive guidance or propose rules for asset classification within the digital asset marketplace. The lawmakers also expressed their disappointment with Chair Gensler’s refusal to acknowledge Ethereum as a non-security digital asset, stating that his “unwillingness” to clarify the treatment of ETH has contributed to the confusion and uncertainty surrounding its classification.
The lawmakers criticized the SEC for creating “uncertainty” among regulated entities by failing to identify which digital assets should be considered “digital asset securities.” They pointed out temporary frameworks established to facilitate trading and custodial services for digital asset securities, calling for regulatory clarity and a comprehensive approach to digital asset classification to minimize uncertainty and foster growth within the digital asset ecosystem. As Chair Gensler and the SEC have yet to respond formally, the industry awaits further developments as the regulatory landscape for digital assets continues to evolve.
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