US Lawmakers Challenge SEC's Stance on Ether amid Regulatory Uncertainty
Summary:
US lawmakers have voiced concerns over the Securities and Exchange Commission's (SEC) approach to Ether (ETH), following Prometheum's plan to offer institutional custody services for the cryptocurrency. The move goes against the Commodity Futures Trading Commission's (CFTC) position of ETH as a non-security digital asset. Recent statements suggest the SEC might classify ETH as a security, possibly blocking spot Ether exchange-traded funds. Meanwhile, the CFTC considers some cryptocurrencies, including ETH and Bitcoin (BTC), as commodities. The CFTC filed a civil lawsuit against KuCoin and two founders for treating these cryptocurrencies as commodities.
In a letter dated March 26, US representatives including Patrick McHenry, head of the House Financial Services Committee, and Deputy Chair French Hill, voiced their unease over the Securities and Exchange Commission's (SEC) approach to Ether (ETH). They were responding to cryptocurrency company Prometheum's plan to offer institutional holding services for Ether, an idea that seems to contradict the Commodity Futures Trading Commission's (CFTC) position of considering ETH as a digital entity that is not a security. The legislators reminded SEC Chair Gary Gensler that there is a broad public record acknowledging ETH as a non-security digital asset with numerous regulations reflecting this idea. They requested action from the SEC, warning that not intervening could irreversibly affect the digital currency market.
Recent statements from the SEC indicate they are planning to designate ETH as a security, a perspective that could prevent the regulator from green-lighting spot Ether exchange-traded funds. ETH-based investment products have already received approval from the SEC for launch and trade in American exchanges.
Contrarily, the CFTC identifies a number of cryptocurrencies, including Bitcoin (BTC) and Ether, as commodities. On the same day the letter was sent, the CFTC lodged a civil lawsuit against KuCoin and two of its founders, alleging that ETH, BTC, and Litecoin (LTC) fall under their authority as commodities.
Addressing Gensler, the representatives mentioned that the SEC's lack of action on setting a clear rule or furnishing detailed guidance for classifying digital assets, only exacerbates the uncertainty in the cryptocurrency sector.
After CFTC Chair Rostin Behnam reinforced the CFTC's stance on Ether following Prometheum's custody service declaration for ETH in February, he alerted a potential standoff with the SEC over digital asset regulations at a House Financial Service Committee hearing. In November 2023, CFTC Commissioner Kristin Johnson offered several avenues to make regulatory rules related to cryptocurrencies clearer; these included legal systems, corporate policies and congressional legislations.
This letter from the lawmakers arrives amid a time when US enforcement bodies are intensifying their scrutiny of crime related to cryptocurrencies.
Published At
3/26/2024 10:19:30 PM
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