US lawmakers ask SEC for clarity on Ethereum asset classification.
A group of Republican lawmakers, including the chairs of the House Financial Services Committee and the House Agriculture Committee, have formally requested that SEC Chairman Gary Gensler provide clear guidance on the regulatory position regarding the management of unsecured digital assets by special purpose brokers. dealer (SPBD).
The March 26 letter specifically sought clarity on the status of Ethereum (ETH) and asked regulators to establish clear definitions of various terms related to cryptocurrencies, digital assets, securities and investment contracts.
The letter was signed by 48 members of Congress. House Financial Services Committee Chairman Patrick McHenry and House Agriculture Committee Chairman Glenn Thompson. Lawmakers asked for answers to their questions by April 9.
State of Ethereum
According to the letter, the SEC has not proposed rules or provided comprehensive guidance on asset classification, and the term “digital asset securities” remains undefined.
Lawmakers said there were concerns about the lack of transparency in the SEC’s SPBD regime and the potential regulatory implications of allowing such custody services, despite public records from the SEC and CFTC identifying ETH as a non-secure digital asset.
The letter asks the following questions:
“Is ETH a digital asset security?”
The query is followed by several other questions depending on the answer.
The letter comes after Prometheum Inc. announced that its subsidiary Prometheum Ember Capital (FINRA-approved SPBD) plans to offer Ethereum custody services to institutional clients.
They highlight the “alarming scenario” raised by Prometheum’s announcement, which could lead to “irreversible consequences for digital asset markets” if allowed to proceed under the current regulatory framework, which does not explicitly allow for SPBD management of unsecured digital assets. claimed that it could lead to .
make the problem worse
The letter criticized the SEC for failing to provide comprehensive guidance or rules for the digital asset market regarding asset classification, highlighting the discrepancies between the SEC’s enforcement actions and its historical recognition of ETH as a non-secure digital asset.
Lawmakers said this lack of clarity has ‘exacerbated’ uncertainty in the digital asset ecosystem, complicating regulators’ ability to comply with SEC regulations.
The letter also highlights the broader implications of the SEC’s potential classification of ETH as a digital asset security, including the impact on CFTC-registered commodity derivatives exchanges and the availability of ETH futures for trading.
These decisions could have serious implications for market participants, potentially eliminating access to essential risk management tools and resulting in significant price fluctuations across ETH markets.
The letter concludes by warning of a “chilling effect” on U.S. digital asset markets if regulatory uncertainty persists and emphasizing the importance of clear and consistent regulatory guidance to ensure continued growth and innovation within the digital asset space.
