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US Lawmakers Urge SEC for Clarity on Prometheum’s Ether Plans

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US Lawmakers Urge SEC for Clarity on Prometheum's Ether Plans

Lawmakers from the United States House Financial Services Committee and House Agriculture Committee have raised concerns about how the Securities and Exchange Commission (SEC) plans to handle Ether (ETH). They have sent a letter to SEC Chair Gary Gensler, urging the commission to address crypto firm Prometheum’s proposal to offer institutional custody services for Ether. The lawmakers argue that this announcement contradicts the Commodity Futures Trading Commission’s (CFTC) view of ETH as a “non-security digital asset.” They believe that allowing Prometheum’s action to proceed could have serious consequences for the digital asset markets.

The SEC has recently indicated that it may classify ETH as a security, a stance that could result in the rejection of spot Ether exchange-traded funds. The CFTC recognizes cryptocurrencies like Bitcoin (BTC) and Ether as commodities. In fact, the CFTC filed a civil enforcement action against KuCoin and two of its founders, asserting that ETH, BTC, and Litecoin (LTC) are commodities within its jurisdiction. According to the lawmakers, the SEC’s failure to propose clear rules or comprehensive guidance on asset classification in the digital asset marketplace has only increased uncertainty in the ecosystem.

The lawmakers highlighted CFTC Chair Rostin Behnam’s reaffirmation of the commission’s position on Ether during a House Financial Service Committee hearing following Prometheum’s announcement. Behnam expressed concern about a potential conflict with the SEC regarding digital asset regulations. In November 2023, CFTC Commissioner Kristin Johnson proposed various paths to achieve regulatory clarity for cryptocurrencies, including through the courts, company policies, and legislation from Congress.

Lawmakers are urging the SEC to address the disparity between its classification of ETH and the CFTC’s stance. They argue that the lack of consistency and clear guidelines for the digital asset marketplace is detrimental to the industry’s growth and stability. It remains to be seen how the SEC will respond to these concerns and whether it will reevaluate its classification of Ether. The outcome will have significant implications for the future of the digital asset market and potential investment opportunities tied to ETH.

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