While the SEC and CFTC accept that the leading cryptocurrency, Bitcoin, is a commodity and not a security, there is no clarity yet on the status of the second largest cryptocurrency, Ethereum.
While SEC chairman Gary Gensler has not made a clear statement on the status of Ethereum, 48 members of Congress sent a letter to Gensler expressing concerns that listing ETH as a security could threaten the crypto industry.
US lawmakers demanded answers from Gensler on how ETH could be legally considered a security by Prometheum.
As you may remember, Prometheum announced that it would launch a custody service aimed at allowing its customers to hold Ethereum (ETH).
At this point, as Prometheum's ETH move approaches an unprecedented moment in the US cryptocurrency history, lawmakers asked the SEC Chairman for clarification on whether ETH is a security or not.
“We are writing to express our concerns regarding Prometheum's recent announcement that its subsidiary, Prometheum Ember Capital LLC (Prometheum Capital), a Financial Industry Regulatory Authority (FINRA) approved Special Purpose Broker-Dealer (SPBD), has announced this for Ethereum (ETH). It will provide custody services to corporate clients later in the month.
At this point, we ask the SEC to clarify Ethereum's position.
We are faced with an alarming scenario where SPBD announces plans to offer custody services for ETH in the face of a regime that does not allow such activities.
If this situation is allowed to continue, it could have irreparable consequences for digital asset markets.
Your reluctance to clarify the status of ETH further increases the confusion and uncertainty regarding the classification of ETH, as demonstrated in the Prometheum announcement.
In order for Prometheum Capital to make the announcement that it would hold ETH and remain compliant with the SPBD regime, the SEC would have to declare that ETH is a digital asset security. However, ETH has not yet been registered as a security with the SEC.”
While an SEC spokesperson declined to comment, saying Gensler would respond directly to members of Congress about the ETH letters, a Prometheum spokesperson said company officials were still reviewing the letter.
*This is not investment advice.