Several Republican lawmakers from the House of Financial Services Committee are questioning the US SEC’s silence over the functioning of  Prometheum’s Ethereum custody services while labeling ETH as a “crypto asset security”. In a recent move, representative John Rose wrote a letter to SEC Chair Gary Gensler and FINRA President Robert Cook, slamming the securities regulator over the lack of clarity surrounding this classification.

GOP Questions US SEC for Prometheum Ethereum Custody

GOP members led by Representative John Rose have expressed concerns regarding the SEC’s and FINRA’s silence about Prometheum’s Ethereum custody services launch. Addressing SEC Chair Gary Gensler and FINRA President Robert Cook in the letter, the Republican lawmakers challenged the lack of clarity over Ethereum’s security status.

They said that previously this year, the US SEC has acknowledged that Ethereum (ETH) is not a security while approving the spot Ethereum ETF in July. Furthermore, in a legal scuffle with Binance, the securities regulator clarified that the term “crypto asset securities” doesn’t apply to digital assets themselves, but instead to the way of selling those assets to retail investors.

However, the GOP lawmakers stated that Prometheum has publicly stated that “ETH is a security” and it intends to offer custodial services to retail investors. The lawmakers seek clarification on the functioning of the special purpose broker-dealer (SPBD) like Prometheum.

Besides, the also a question of how the SEC and FINRA allow the custodial service provider to operate when they see ETH as a non-security. In the letter to the top leaders of the SEC and FINRA, the GOP leaders asked:

“As SEC Chair Gary Gensler acknowledged during his testimony before the Committee, SPBDs “are not allowed to custody non-securities,” yet that is precisely what Prometheum has done when it soft-launched its custodial services for ETH”.

This shows the SEC’s unclear stand on crypto asset securities and how they allowed Prometheum as a company to navigate through the gaps from the US SEC oversight.

Republican Leaders Slam Gary Gensler

In its recent letter to the regulators, Representative John Rose wrote: “Players in the digital assets space deserve certainty from their regulators. Yet under Chair Gensler, they’ve only received chaos and confusion. I hope while Chair Gensler is cleaning out his office, he can heed our concerns seriously and maybe deliver some real guidance on his way out the door.”

On the other hand, Gary Gensler reaffirmed his stand on crypto regulation amid his resignation calls. He added that stricter oversight of the crypto market is essential to protect investors.

Although, there’s not much clarity regarding who will Donald Trump appoint as the next SEC Chair, however, it’s becoming more likely that Gensler will step down from his position instead of continuing till his term ends in 2026.

Most sources stated that the new US SEC chair will be pro-crypto. However, Fox Business’s Eleanor Terret reported that the Trump administration is willing to give the responsibility of handling crypto regulations to CFTC.

🚨I’ve been told by sources close to the transition team that the new @SECGov chair will be pro-crypto, the nominee will also have to be well-equipped to handle all the other issues under the SEC’s purview — public companies, the stock market, the bond market, private funds, the… https://t.co/iIRrhwvSxx

— Eleanor Terrett (@EleanorTerrett) November 15, 2024

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Bhushan Akolkar

Bhushan is a FinTech enthusiast with a keen understanding of financial markets. His interest in economics and finance has led him to focus on emerging Blockchain technology and cryptocurrency markets. He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.