Republican Lawmakers Seek Clarity on Ethereum Custody from SEC
Republican lawmakers led by House Financial Services Committee Chair Patrick McHenry and House Agriculture Committee Chair Glenn Thompson have jointly reached out to Securities and Exchange Commission (SEC) Chair Gary Gensler to request more clarity on the agency’s position regarding the custody of Ethereum (ETH) by Prometheum.
Lawmakers Express Concerns
The lawmakers, including Representatives French Hill, Dusty Johnson, Tom Emmer, and Warren Davidson, have raised concerns about the lack of transparency in the SEC’s Special Purpose Broker-Dealer (SPBD) regime and the potential implications of allowing Prometheum to offer custody services for ETH.
Recognition Of Ethereum As Non-Security
In a letter sent to Chair Gensler, the lawmakers highlighted the previous recognition by the SEC and Commodity Futures Trading Commission (CFTC) of Ethereum as a non-security digital asset. They emphasized that the current SEC regulatory framework does not permit SPBD custody of non-security digital assets, warning of potential “irreparable consequences” for digital asset markets if Prometheum is allowed to proceed.
- The lawmakers urge Chair Gensler to clarify the SEC’s stance on several key aspects related to Ethereum custody and regulation
- They express disappointment over the lack of a clear definition of “digital asset securities” and the need for comprehensive guidance in the digital asset marketplace
Lawmakers Urge Resolution
The lawmakers criticized the SEC for creating uncertainty among regulated entities by failing to clearly identify which digital assets should be considered “digital asset securities.” They highlighted temporary frameworks established for trading and custodial services for digital asset securities and urged Chair Gensler to promptly address their concerns to minimize uncertainty and foster growth in the digital asset ecosystem.
- Referencing a no-action letter issued to FINRA, the lawmakers highlight the inconsistent treatment of Ethereum by Chair Gensler and the SEC
Response from Chair Gensler and SEC
As of now, Chair Gensler and the SEC have not formally responded to the letter from the Republican lawmakers. The industry awaits further developments as the regulatory landscape for digital assets continues to evolve.
Hot Take: Clear Communication Essential for Digital Asset Regulation
Clear communication and regulatory clarity are crucial for minimizing uncertainty and fostering growth within the digital asset ecosystem. Lawmakers are urging the SEC to provide definitive guidance on Ethereum custody and classification to ensure a transparent and thriving market for digital assets.
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