Republican House members demand Crypto Platform Prometheum: SEC Explains

Influential House Republicans want Gensler to explain how Prometheum may legally classify ETH as a security. Gensler received a letter from 48 Congressmen warning that classifying ETH as a security could harm the crypto industry.

Congress urges the Securities and Exchange Commission (SEC) to clarify its role in Prometheum Inc.'s custody operation for Ethereum tokens {{ETH}}, marking a milestone in U.S. crypto history.

"We are faced with an alarming scenario in which an 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 to SEC Chair Gary Gensler, signed by 46 other members of Congress. "This action, if allowed to proceed, could have irreparable consequences for the digital asset markets."

Prometheum announced ETH custody as a customer asset. The debut was originally scheduled for the first quarter, but a spokesman stated Tuesday that it may happen next quarter.

In Tuesday's letter, Rep. Patrick McHenry (R-N.C.) and Rep. Glenn "GT" Thompson (R-Penn.), the chairmen of the two committees, and other Republican lawmakers, many of whom are crypto industry supporters, argued that ETH is not a security, making Prometheum's handling illegal.

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 note added. An SEC spokesperson said Gensler would "respond to members of Congress directly," while a Prometheum representative said the letter is being reviewed.

ETH has been a battleground between the SEC and the CFTC, which has openly classified it as a commodity like bitcoin. Later, SEC officials said the conclusion on ETH isn't obvious, especially after the Merge, a 2022 code upgrade that changed Ethereum's consensus process from proof-of-work to proof-of-stake. Meanwhile, ETH futures products have traded on CFTC-regulated platforms, and the SEC approved ether futures ETFs last year.

The SEC is apparently investigating ETH and its associated entities to determine if it's a security.

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