US Lawmakers Press SEC for Clarity on Prometheum’s Ether Plans amid Regulatory Uncertainty

Lawmakers from the United States House Financial Services Committee and House Agriculture Committee have raised concerns over the Securities and Exchange Commission’s (SEC) approach towards Ether.

In a March 26 letter addressed to SEC Chair Gary Gensler, key lawmakers including House Financial Services Committee Chair Patrick McHenry and Vice Chair French Hill urged the commission to clarify its stance regarding crypto firm Prometheum’s proposal to offer institutional custody services for Ether. The lawmakers pointed out a potential conflict with the Commodity Futures Trading Commission’s (CFTC) classification of Ether as a “non-security digital asset.”

“[T]he agencies have an extensive public record identifying ETH as a non-security digital asset,” said the lawmakers. “There are multiple regulatory actions grounded in that position […] [Prometheum’s] action, if allowed to proceed, could have irreparable consequences for the digital asset markets.”

Source: Financial Services GOP

The SEC has recently hinted at the possibility of classifying Ether as a security, a move that experts believe might hinder the approval of spot Ether exchange-traded funds (ETFs). Despite this, the SEC has already greenlit investment products linked to Ether futures for trading on US exchanges.

In contrast, the CFTC recognizes cryptocurrencies such as Bitcoin and Ether as commodities. The commission’s recent civil enforcement action against KuCoin and its founders highlighted Ether, Bitcoin, and Litecoin as commodities, underscoring its jurisdiction in this area.

Lawmakers expressed frustration over the SEC’s lack of clear guidance or proposed rules for classifying digital assets, exacerbating uncertainty within the digital asset ecosystem.

The letter to Gensler referenced CFTC Chair Rostin Behnam’s reaffirmation of the commission’s stance on Ether during a House Financial Service Committee hearing following Prometheum’s announcement. Behnam warned of potential conflicts with the SEC regarding digital asset regulations. Additionally, CFTC Commissioner Kristin Johnson previously outlined possible paths for regulatory clarity on crypto, including legal avenues, company policies, and congressional legislation.