Lawmakers from the United States House Financial Services Committee and House Agriculture Committee have raised concerns about the Securities and Exchange Commission’s (SEC) approach to Ether (ETH). In a letter to SEC Chair Gary Gensler on March 26, lawmakers, including Patrick McHenry, Chair of the House Financial Services Committee, and French Hill, Vice Chair, urged the commission to address the plans of crypto firm Prometheum to offer institutional custody services for Ether. They argued that this announcement contradicts the Commodity Futures Trading Commission’s (CFTC) categorization of ETH as a “non-security digital asset.” The lawmakers warned that allowing Prometheum’s actions to proceed could have significant consequences for the digital asset markets.
The SEC has recently indicated its intention to classify ETH as a security, a move that some experts believe could lead to the commission denying approval for spot Ether exchange-traded funds. However, the SEC has already approved investment vehicles tied to ETH futures for listing and trading on U.S. exchanges.
In contrast, the CFTC recognizes cryptocurrencies like Bitcoin (BTC) and Ether as commodities. On March 26, the commission filed a civil enforcement action against KuCoin and two of its founders, asserting that ETH, BTC, and Litecoin (LTC) are commodities and fall within the CFTC’s jurisdiction.
The lawmakers emphasized in their letter to Gensler that the CFTC has consistently maintained its position on Ether. CFTC Chair Rostin Behnam reiterated this position during a House Financial Service Committee hearing following Prometheum’s ETH custody announcement in February. He cautioned about a potential conflict with the SEC regarding digital asset regulations. CFTC Commissioner Kristin Johnson also proposed several possible approaches to achieve regulatory clarity in the crypto industry, including legal action, company policies, and legislation from Congress.
Overall, U.S. enforcement agencies are intensifying their efforts to combat crypto-related crimes, signaling increased scrutiny in this area.