Despite inconsistent asset classification policies, GOP lawmakers question SEC's approval of Prometheum’s Ethereum custody services.
Prometheum labels Ethereum security, while SEC acknowledges ETH as non-secure in approving a spot ETF earlier.
Republicans urge the SEC to clarify regulatory gaps as SPBDs are barred from custodying non-security assets like Ethereum.
Republican House Financial Services Committee lawmakers have criticized the U.S. SEC and the Financial Industry Regulatory Authority concerning Prometheum Ethereum custody services. Representative John Rose and his team of lawmakers questioned how Prometheum was allowed to offer custody services for Ethereum. They highlight the SEC's inconsistent stance on asset classification.
SEC and FINRA Call for Ethereum Custody Services Clarity
GOP lawmakers address Ethereum's lack of regulatory clarity in a letter to SEC Chair Gensler and FINRA President Robert Cook. The letter emphasized that SPBDs are prohibited from custodying non-security assets. However, Prometheum launched its custodial services for ETH while labeling it as a “crypto asset security.”
https://twitter.com/EleanorTerrett/status/1857563007477338203
The lawmakers noted that the SEC has previously taken contradictory positions on Ethereum. Moreover, the SEC approved a spot Ethereum ETF in July 2024, contrary to its legal proceedings against Binance. This proceeding indicates that “crypto asset securities” refer to how assets are sold. They argue that this inconsistency has left the digital asset industry without clear regulatory guidance.
Additionally, Prometheum’s public classification of ETH as a security while launching custody services has further fueled these questions. The lawmakers questioned how the SEC and FINRA permit such operations despite earlier classifying ETH as not a security.
Promethium's Role in Regulatory Oversight
Prometheum’s activities have highlighted regulatory gaps in the oversight of SPBDs. Representative John Rose stated in his letter that players in the digital asset market require clarity from their regulators. He criticized SEC Chair Gensler’s leadership, claiming it has resulted in confusion and a lack of actionable guidance for cryptocurrency.
Furthermore, the letter also questioned the SEC’s decision to approve Prometheum’s operations, arguing it demonstrates unclear and inconsistent regulatory enforcement. GOP lawmakers see this as indicative of broader issues in the SEC's approach to crypto regulation.
SEC Chair Changes and Crypto Oversight Shift
As Gary Gensler faces growing calls for resignation, there is speculation about who might succeed him. Reports suggest a pro-crypto SEC Chair could be appointed under a potential Donald Trump administration. Additionally, Fox Business reporter Eleanor Terret explains that Trump’s administration may shift the crypto regulation duties to the CFTC.
Legislators have questioned Gensler's commitment to stricter crypto market oversight, arguing that his tenure has created confusion rather than clarity. Market participants now await potential changes in leadership and regulatory policy.
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