Four Republican members of the US House Committee on Financial Services are raising concerns about the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority’s (FINRA) position on Prometheum Capital’s launch of Ethereum (ETH) custody services.
In a letter addressed to SEC Chairman Gary Gensler and FINRA President and CEO Robert Cooke, U.S. Representatives John Rose, French Hill, Dusty Johnson and William R. Timmons IV say that the SEC has already recognized that Ethereum is not a security security and that it is a has a special purpose. Broker-dealers (SPBDs) such as Prometheum cannot offer custody services for non-securities.
Despite this, officials say Prometheum has publicly stated that Ethereum is a security service and even soft-launched custody services for the crypto asset in May.
“It remains unclear to us how Prometheum, as a FINRA-approved securities custody-only SPBD, can hold ETH in compliance with SEC and FINRA rules, and why the SEC and FINRA continue to allow Prometheum to hold ETH for the public to keep. as security.”
The letter states that Prometheum’s statement and actions are “misleading” and have already caused confusion in the marketplace, with the silence of the SEC and FINRA worsening the situation.
“The SEC and FINRA are complicit in perpetuating confusion and uncertainty in the marketplace, which ultimately harms market participants and consumers.
The SEC and FINRA’s silence is irresponsible and continues to raise troubling questions as it relates to the SPBD’s requirements and process, as well as the SEC’s and FINRA’s ability to oversees broker-dealers and ensures the integrity of the market.”
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