Members of the United States Congress have set a deadline of June 5 for the Securities and Exchange Commission (SEC) to provide more detailed answers regarding the classification of Ethereum (ETH) and controversial crypto firm Prometheum’s intention to custody ETH. The dissatisfaction stems from a March 26 inquiry by 48 members of the House Financial Services and Agriculture Committees, including prominent figures such as House Financial Services Committee Chairman Patrick McHenry.
Prometheum, which describes itself as the first crypto-centric broker-dealer to register with the SEC, has faced criticism from crypto enthusiasts for parroting the SEC’s stance and aligning with statements made by SEC Chair Gary Gensler. The firm’s recent launch of a custody service for ETH as a security has raised speculations over the regulatory status of the asset.
Lawmakers are concerned about the SEC and FINRA potentially setting a problematic precedent with Prometheum’s SPBD status and its plan to custody ETH. They have requested detailed records and communications regarding discussions between the SEC and FINRA concerning Prometheum’s application process and the regulatory classification of ETH.
Prometheum’s co-CEO Aaron Kaplan has previously testified before Congress, aligning with the SEC’s stance that a compliance pathway exists for crypto firms. However, the House Financial Services Committee has described Prometheum’s crypto approach as “shady,” suggesting it may be used by the SEC to demonstrate the adequacy of existing securities laws for crypto firms.
The controversy surrounding Prometheum and the SEC’s response to inquiries about Ethereum’s classification continues to unfold, with Congress demanding more transparency and clarity from regulatory authorities. Stay tuned for updates on this developing story.
