-
Influential
House
Republicans
are
demanding
answers
from
Gensler
on
how
ETH
could
legally
be
treated
as
a
security
by
Prometheum. -
A
total
of
48
members
of
Congress
signed
a
letter
to
Gensler,
expressing
concerns
about
how
listing
ETH
as
a
security
could
threaten
the
crypto
industry.
As
Prometheum
Inc.
nears
an
unprecedented
moment
in
U.S.
crypto
history
by
beginning
a
custody
operation
that
intends
to
hold
customers’
Ethereum
tokens
(ETH),
the
industry’s
friends
in
Congress
are
demanding
the
Securities
and
Exchange
Commission
(SEC)
explain
what
it
means
to
do
about
this
first
U.S.
special
purpose
broker-dealer
(SPBD)
for
digital
assets.
“We
are
faced
with
an
alarming
scenario
in
which
a
SPBD
has
announced
that
it
intends
to
offer
custodial
services
for
ETH
under
a
regime
that
does
not
permit
such
activity,”
the
Republican
chairmen
of
the
House
Financial
Services
and
Agriculture
committees
wrote
in
a
letter
to
SEC
Chair
Gary
Gensler,
also
signed
by
46
other
members
of
Congress.
“This
action,
if
allowed
to
proceed,
could
have
irreparable
consequences
for
the
digital
asset
markets.”
Prometheum
had
announced
a
plan
to
begin
custody
of
ETH
as
a
customer
asset.
The
initial
plan
was
to
start
in
the
first
quarter
of
this
year,
though
the
launch
is
now
likely
to
happen
next
quarter,
a
spokesman
said
on
Tuesday.
Rep.
Patrick
McHenry
(R-N.C.)
and
Rep.
Glenn
“GT”
Thompson
(R-Penn.),
the
chairmen
of
the
two
committees,
and
the
other
Republican
lawmakers
–
many
of
whom
have
been
staunch
supporters
of
the
crypto
industry
–
argued
in
Tuesday’s
letter
that
ETH
is
not
a
security,
making
the
asset
illegal
to
handle
by
a
securities
firm
like
Prometheum.
The
lawmakers
also
slammed
Gensler’s
unwillingness
to
directly
say
ether
is
a
security.
“Your
unwillingness
to
clarify
the
treatment
of
ETH
only
exacerbates
the
confusion
and
uncertainty
regarding
ETH’s
classification
as
demonstrated
by
the
Prometheum
announcement,”
the
letter
said.
An
SEC
spokesman
declined
to
comment,
saying
Gensler
would
“respond
to
members
of
Congress
directly,”
and
the
spokesman
for
Prometheum
said
company
officials
are
still
reviewing
the
letter.
ETH
has
represented
a
tug-of-war
between
the
SEC
and
the
Commodity
Futures
Trading
Commission,
which
has
openly
declared
ETH
to
fit
into
its
commodities
jurisdiction,
much
like
bitcoin
does.
While
the
SEC
in
earlier
days
seemed
to
agree,
agency
officials
later
suggested
the
decision
on
ETH
isn’t
yet
clear,
especially
after
the
Merge,
a
2022
code
update
that
shifted
Ethereum
from
a
so-called
proof-of-work
consensus
mechanism
to
a
proof-of-stake
one.
Meanwhile,
ETH
futures
products
have
traded
on
CFTC-regulated
platforms,
and
the
SEC
approved
ether
futures
exchange-traded
funds
(ETFs)
to
begin
trading
last
year.
The
SEC
has
reportedly
been
probing
the
nature
of
ETH
and
the
firms
tied
to
it,
potentially
readying
an
answer
to
whether
it’s
a
security
or
not
in
the
regulator’s
eyes.
Prometheum
itself
also
represents
a
potential
turning
point
in
the
U.S.
treatment
of
the
crypto
sector.
Gensler
has
more
than
once
offered
up
Prometheum
as
an
example
of
a
firm
seeking
to
leap
through
the
necessary
regulatory
hoops
to
handle
crypto
legally
in
the
U.S.
If
the
SEC
allows
Prometheum
to
operate
as
a
custody
provider
and
trading
platform
for
tokens
the
firm
concludes
are
securities,
it
undermines
the
industry’s
core
argument
that
it’s
impossible
for
crypto
firms
to
do
business
under
existing
SEC
rules.
If
the
SEC
instead
puts
a
stop
to
Prometheum’s
business,
it
could
demonstrate
that
the
agency’s
request
for
crypto
firms
to
come
in
and
register
was
hollow.
ETH
is
not
registered
as
a
security
with
the
SEC,
which
the
lawmakers
suggest
make
it
impossible
to
handle
as
a
security
for
Prometheum.
The
company’s
leaders,
though,
have
argued
in
the
past
that
it’s
not
their
job
to
register
the
assets
that’ll
be
held
and
traded
in
their
business.
Congress
has
been
working
on
legislation
to
better
map
the
regulatory
road
for
crypto
in
the
U.S.,
but
while
some
legislation
has
moved
closer
to
floor
votes
in
the
House
of
Representatives,
the
Senate
has
been
more
sluggish.
“Allowing
one
market
participant
and
regulation
by
enforcement
to
dictate
the
future
of
digital
asset
regulation
is
unacceptable,”
the
lawmakers
argued
in
their
letter.