Congress Seeks SEC Clarity on Ethereum and Digital Asset Rules

A group of GOP Congress members, including chairs of key House committees, has asked SEC Chair Gary Gensler for clearer rules on digital assets like Ethereum (ETH) and their custody by Special Purpose Broker-Dealers (SPBDs).

Their March 26 letter highlights the urgent need for regulatory transparency to ease compliance for businesses in the digital asset sector.

The lawmakers' letter underscores the SEC's reluctance to categorize assets clearly, leaving the definition of “digital asset securities” unclear.

Despite historically being treated as a non-security by regulators, there's worry about the lack of clear guidelines from the SEC regarding SPBDs handling such assets.

The request centers on Ethereum's classification as a security or not, following Prometheum Inc.'s declaration of its subsidiary offering Ethereum custody services to big investors.

This action raises concerns about possible negative outcomes if it proceeds without a solid regulatory framework.

Lawmakers are sounding the alarm over the potential market risks if ETH is classified as a security.

They argue this could affect the trading of ETH Futures and disrupt the digital asset markets. The letter criticizes the SEC for not providing adequate guidance, which complicates compliance and fosters uncertainty in the digital asset space.

In conclusion, the congress members warn of the adverse effects of ongoing regulatory ambiguity on the U.S. digital asset markets. They stress the necessity for clear and consistent rules to support innovation and growth.

The letter, signed by 48 Congress members including Patrick McHenry and Glenn Thompson, calls for a response from Gensler by April 9, underlining the legislative push for a more transparent regulatory approach to digital assets.