As a seasoned crypto investor with over a decade of experience navigating the volatile and ever-evolving landscape of digital assets, I can’t help but feel a mix of frustration, curiosity, and amusement as I read about the latest developments between the GOP and the US SEC regarding Prometheum’s Ethereum custody services.
A group of Republican representatives from the House Financial Services Committee are expressing concerns about the U.S. Securities and Exchange Commission (SEC) not addressing the operations of Prometheum’s Ethereum storage services, while categorizing ETH as a “security token.” In a recent action, representative John Rose penned a letter to SEC Chair Gary Gensler and FINRA President Robert Cook, criticizing the securities regulator for its ambiguity regarding this classification.
GOP Questions US SEC for Prometheum Ethereum Custody
A group of GOP representatives, headed by Representative John Rose, have voiced worries about the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) not addressing Prometheum’s launch of Ethereum custody services. In a letter to SEC Chair Gary Gensler and FINRA President Robert Cook, these Republican legislators have questioned the ambiguity surrounding Ethereum’s classification as a security.
Earlier this year, the U.S. Securities and Exchange Commission (SEC) recognized Ethereum (ETH) as not being a security when they approved an Ethereum ETF in July. In a legal dispute with Binance, the SEC made it clear that the term “crypto asset securities” doesn’t refer to digital assets themselves, but rather to how those assets are sold to individual investors.
In contrast, GOP legislators have pointed out that Prometheum has openly declared ETH as a security and plans to provide custodial services for retail investors. These lawmakers are now requesting clarification regarding the operations of a special purpose broker-dealer (SPBD) like Prometheum.
As a crypto investor, I’m pondering over the question of how custodial service providers can function under the watch of the SEC and FINRA, given that they view Ether (ETH) as a non-security. In a recent correspondence to the top brass at the SEC and FINRA, GOP leaders have posed this very inquiry:
During a hearing, SEC Chairman Gary Gensler stated that Special Purpose Brokerage Firms (SPBDs) are not authorized to hold assets other than securities. However, it appears that the company Prometheum may have violated this rule when they quietly launched custodial services for Ethereum (ETH), which is a non-security asset.
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 a recent communication to regulatory bodies, Representative John Rose expressed: “Representatives in the digital assets sector require clarity from their regulators. However, under Chair Gensler’s leadership, they’ve mainly experienced disorder and perplexity. I hope as Chair Gensler is wrapping up his tenure, he will take our worries into account earnestly and possibly offer some practical advice before leaving.
Meanwhile, Gary Gensler reinforced his position on cryptocurrency regulation during discussions about his potential resignation. He emphasized that increased scrutiny over the crypto market is crucial for safeguarding investors’ interests.
Despite uncertainty surrounding who Donald Trump might choose as the next SEC Chair, it appears increasingly probable that Gary Gensler may resign from his post before his tenure ends in 2026, rather than serving out the remainder of his term.
While many reports suggest that the incoming US SEC chair may be favorable towards cryptocurrencies, Fox Business’s Eleanor Terret has indicated that the Trump administration could assign the task of regulating cryptocurrencies to the Commodity Futures Trading Commission (CFTC) instead.
Information from reliable sources near the transition team indicates that the chosen Chair for the Securities and Exchange Commission (SEC) is expected to be supportive of cryptocurrency. However, it’s important to note that this individual will also need a comprehensive understanding to manage all other matters under the SEC’s jurisdiction, such as public companies, the stock market, the bond market, private funds, and more.
— Eleanor Terrett (@EleanorTerrett) November 15, 2024
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2024-11-16 15:48