US lawmakers seek SEC explanation regarding crypto platform

Lawmakers have requested Chair Gensler to elucidate the SEC’s position in an SPBD’s skill to custody non-securities. American lawmakers, under the leadership of Patrick McHenry, sent a clarification letter to Gary Gensler, Chair, SEC. 

The lawmakers requested clarification about the SEC’s position concerning an SPBD’s (Special Purpose Broker Dealer) non-security digital assets custody. They appealed to Gary Gensler, Chair, SEC, to address the organization’s willingness to tackle the SPBD decision, ETH cataloging, and the SEC’s approach regarding the crypto platform.

ETH has been identified as a digital asset not secure by the SEC and CFTC (Commodity Futures Trading Commission). The lawmakers pointed out that the SEC’s contemporary administration does not allow Special Purpose Broker Dealer custody of assets. They warned that allowing Prometheum will have irreparable consequences for the digital asset markets. It was recently announced that Prometheum subsidiary, Prometheum Ember Capital LLC, a government-approved SPBD, will give safekeeping services for Ether.

The absence of clarity in SEC SPBD management and the SEC’s failure to address the issue concern lawmakers. According to them, the division of ETH is another issue that needs to be addressed immediately. They said that SPBD’s announcement to offer custodial services for ETH led to a challenging situation. 

Lawmakers highlighted that other prominent players in the market disagree with the stand of the SEC. They said that the SEC’s inability to intervene in the issue has worsened the uncertainty in the crypto market. The SEC’s enforcement actions have been reported to have worsened the situation.

The SEC had earlier issued a no-action letter to FINRA detailing designing a system for a registered broker-dealer to activate an ATS that permits the transaction of assets. Even now, It is unclear whether Prometheum offers digital assets through its ATS. The SEC” ‘s decisions will have short-term and long-term effects in the global digital assets marketplace. 

According to lawmakers, the SEC’s stand will have a chilling effect on the US digital asset markets. They fear that the SEC’s action will imperil the existing approved ETFs and lead to huge price dislocation across the ETH market.

It is a fact that the letter by American lawmakers has left Ether in regulatory limbo between the SEC and CFTC. The Securities and Exchange Commission has recently announced that it plans to classify Ethereum as a security. Some experts opine that this may lead to the SEC denying approval for spot Ether exchange-traded funds. It is interesting to note that the CFTC has recognized numerous cryptocurrencies like Bitcoin and Ether. 

The CFTC Chair Rostin Benham reiterated their position on Ether, indicating a potential conflict with the Securities and Exchange Commission over digital asset rules. Prometheum’s offer of providing Ether legal custody services does not match the decisions adopted by the US regulatory bodies.

David Cox

David is a finance graduate and crypto enthusiast. He projects his expertise in subjects like crypto and Blockchain while writing for CryptoNewsZ. Being from Finance background, he efficiently writes Price Analysis. Apart from writing, he actively nurtures hobbies like sports and movies.

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