Lawmakers from the United States House Financial Services Committee and House Agriculture Committee have raised issues regarding the Securities and Exchange Commission (SEC)'s approach towards the handling of Ether in response to crypto firm Prometheum's proposal to offer institutional custody services for Ether. According to the lawmakers, the announcement contradicts the stance of the Commodity Futures Trading Commission (CFTC) that recognizes Ether as a "non-security digital asset."
The lawmakers emphasized that there is a robust public record identifying Ether as a non-security digital asset and expressed concerns that allowing Prometheum's actions to proceed could have significant repercussions for the digital asset markets.
The SEC has indicated a potential classification of Ether as a security, which experts speculate might result in the disapproval of spot Ether exchange-traded funds. Despite this, the SEC has approved investment vehicles linked to Ether futures for listing and trading on U.S. exchanges.
On the other hand, the CFTC has acknowledged cryptocurrencies like Bitcoin and Ether as commodities, as evidenced by a civil enforcement action taken against KuCoin and its founders on March 26 involving Ether, Bitcoin, and Litecoin.
Lawmakers emphasized in the letter to SEC Chair Gary Gensler that the lack of clear rules or comprehensive guidance for asset classification in the digital asset market has only increased uncertainties in the ecosystem.
Following Prometheum's announcement of Ether custody services, CFTC Chair Rostin Behnam reiterated the commission's perspective on Ether during a House Financial Service Committee hearing, cautioning against possible conflicts with the SEC over digital asset regulations.
CFTC Commissioner Kristin Johnson proposed multiple avenues - including legal recourse, organizational policies, and congressional legislation - in November 2023 to establish regulatory clarity in the crypto space.
