US lawmakers demand SEC clarity on Ethereum’s asset classification

A group of Republican lawmakers, including the chairs of the House Financial Services Committee and the House Agriculture Committee, will provide SEC Chairman Gary Gensler with clear guidance on the regulatory stance regarding custody of non-secure digital assets by special purpose brokers. formally requested. Dealer (SPBD).

of Letter of March 26th In particular, it calls for clarification on the status of Ethereum (ETH), and also calls on regulators to establish clear definitions of various terms related to virtual currencies, digital assets, securities, and investment contracts.

The letter was signed by 48 MPs, including: House Financial Services Committee Chairman Patrick McHenry and House Agriculture Committee Chairman Glenn Thompson. Lawmakers asked them to respond to questions by April 9.

Ethereum status

According to the letter, the SEC has failed to propose rules or provide comprehensive guidance regarding asset classification, and the term “digital asset securities” remains undefined.

Lawmakers cited a lack of transparency in the SEC’s SPBD regime and allowing such custodial services, even though both the SEC and CFTC public records identify ETH as a non-security digital asset. He said he was concerned about the potential regulatory implications of this.

This letter asks the following questions:

“Is ETH a digital asset security?”

The query is followed by several other questions depending on the answer.

This letter follows the announcement that Promethium Ember Capital (FINRA approved SPBD), a subsidiary of Promethium, Inc., will provide Ethereum custody services to institutional clients.

They highlighted the “alarming scenario” posed by Promethium’s announcement, saying that if things proceed as planned under the current regulatory framework, which does not explicitly allow SPBDs to store non-secure digital assets, “digital assets He argued that this could have irreversible consequences for the market. .

make the problem worse

The letter highlights the discrepancies between the SEC’s enforcement actions and the historical recognition of ETH as a non-security digital asset, stating that the SEC does not provide comprehensive guidance or rules to the digital asset market regarding asset classification. criticized.

Lawmakers said this lack of clarity “exacerbates” uncertainty within the digital asset ecosystem and complicates regulated companies’ ability to comply with SEC regulations.

The letter also highlights the broader implications the SEC could have of classifying ETH as a digital asset security, including the impact on CFTC-registered commodity derivatives exchanges and the ability to trade ETH futures.

Such decisions can have a significant impact on market participants, leading to loss of access to important risk management tools and potentially causing significant price fluctuations across the ETH market.

The letter warns of a “chilling effect” on the U.S. digital asset market if regulatory uncertainty continues, and provides clear and consistent regulatory guidance to ensure continued growth and innovation in the digital asset space. The paper concludes by emphasizing the importance of

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