Amid mounting regulatory uncertainty, a group of 48 US lawmakers has intensified calls for the Securities and Exchange Commission (SEC) to provide unambiguous guidance on the classification of Ethereum (ETH). In a formal letter addressed to SEC Chair Gary Gensler, influential figures such as House Financial Services Committee Chair Patrick McHenry and House Committee on Agriculture Chair Glenn Thompson have sought explicit clarification on whether ETH should be deemed a digital asset security or not.
The lawmakers’ urgency stems from the recent announcement by Prometheum Ember Capital, a FINRA-approved broker-dealer subsidiary, to offer institutional custody services for Ethereum. They argue that allowing such services under the current opaque regulatory framework, which lacks clear provisions for non-security digital asset custody by broker-dealers, could have severe ramifications for the digital asset markets.
Highlighting the SEC’s failure to establish comprehensive rules or guidance on asset classification, the letter notes that the term “digital asset securities” remains undefined. Despite the historical recognition of ETH as a non-security asset by both the SEC and the Commodity Futures Trading Commission (CFTC), the lawmakers express concerns over the potential regulatory implications of the SEC’s stance on broker-dealer custody of ETH.
The letter poses a direct question to Gensler: “Is ETH a digital asset security?” and requests a response by April 9. It also calls for the establishment of clear definitions related to crypto, digital assets, securities, and investment contracts.
Lawmakers warn that persistent regulatory ambiguity could have a “chilling effect” on US digital asset markets, stifling growth and innovation within the industry. As the regulatory landscape evolves, this letter underscores the growing demand for the SEC to provide clear and consistent guidance to facilitate compliance and foster a thriving digital asset ecosystem.
