Republican lawmakers, led by House Financial Services Committee Chairman Patrick McHenry and House Agriculture Committee Chairman Glenn Thompson, made a joint effort to ask Securities and Exchange Commission (SEC) Chairman Gary Gensler to authorize the agency to store Ethereum. Requested further clarification on the position. ETH) Prometheum.
Lawmakers, including Representatives French Hill, Dusty Johnson, Tom Emmer, and Warren Davidson, have expressed concerns about the lack of transparency in the SEC’s special purpose broker-dealer (SPBD) regime and the potential consequences of allowing Prometheum to proceed with its policies. custody services For ETH.
Ethereum is recognized as insecure
their letter In a report sent on Tuesday, lawmakers highlighted that the SEC and the Commodity Futures Trading Commission (CFTC) had previously recognized Ethereum as a non-secure digital asset.
Based on this precedent, they noted that the SEC’s current regulatory framework does not allow SPBD custody for non-secure digital assets. Lawmakers also warned that allowing Prometheum to proceed under these circumstances could lead to “irreversible consequences.” digital asset market.
Republican lawmakers asked Gensler to weigh in on several key aspects, including SPBD’s ability to govern non-securities, the SEC’s approach to addressing SPBD non-compliance, Ethereum’s regulatory classification, and the SEC’s specific position on Prometheum’s recent announcement. We called on the SEC to clarify its position. .
The letter further raised concerns about the lack of a clear definition of “digital asset securities” and the SEC’s failure to provide comprehensive guidance or propose rules for asset classification within the digital asset market.
Lawmakers also expressed disappointment with Gensler’s refusal to recognize Ethereum as an asset. non-secure He said his “unwillingness” to clarify the treatment of ETH had contributed to the confusion and uncertainty surrounding its classification.
Lawmakers call for resolution
Lawmakers accused the SEC of creating “uncertainty” among regulators by failing to identify which digital assets should be considered “digital asset securities.”
They referred to an interim framework established to facilitate trading and custody services for digital asset securities. The SEC’s Trading and Markets Division issued a no-action letter to FINRA in September 2020 setting out the following conditions: Registered Broker-Dealer We operate an alternative trading system (ATS) that trades digital asset securities. The letter adds:
Despite your history of recognizing Ethereum as an insecure digital asset, you have consistently failed to acknowledge that ETH is not a security. In testimony before the House Financial Services Committee in March 2023, you declined to answer several questions about whether ETH should be considered a commodity. Your unwillingness to clearly state how you handle ETH will only further exacerbate the confusion and uncertainty regarding ETH classification, as evidenced by the Prometheum announcement.
Ultimately, the letter highlighted the need for regulatory clarity and a comprehensive approach to digital asset classification to minimize uncertainty and foster growth within the digital asset ecosystem.
They asked Chairman Gensler to immediately address their concerns. potential impact For market participants and the wider digital asset market.
Chairman Gensler and the SEC have not yet formally responded to the letter, but the industry awaits further developments as the regulatory environment for digital assets continues to evolve.
Featured image from Shutterstock, chart from TradingView.com