Crypto currency markets are bustling, and today’s FUD centers around a lawsuit against the KuCoin exchange. However, yesterday marked the first net inflow into spot Bitcoin ETFs after a week, allowing BTC prices to hold above $69,000. A few minutes ago, another development occurred, directly concerning applications for Ethereum ETFs.
Spot Ethereum ETF Letter
US Republicans have sent a new letter to the SEC. Led by Chairman Patrick McHenry of the House Financial Services Committee and the House Agriculture Committee, Republicans are requesting SEC Chairman Gary Gensler to clarify the SEC’s position on several issues. The announcement stated:
“The lawmakers are asking the SEC to clarify its position on the Special Purpose Broker Dealer’s (SPBD) ability to custody non-security digital assets, the SEC’s desire to address SPBD non-compliance, the regulatory classification of ETH, and the SEC’s stance on Prometheum’s announcement.
As you know, there are extensive public records defining ETH as a non-security digital asset. Numerous regulatory actions are based on this position. However, we are now facing a concerning scenario where a SPBD plans to offer custody services for ETH under a regime that does not allow such activity. If allowed to continue, this action could have irreparable consequences for the digital asset markets.”
The letter also criticizes the SEC for often labeling most cryptocurrencies as securities. It highlights concerns about the confusion caused by the lack of a clear definition of securities for crypto.
“Furthermore, the SEC’s failure to propose a rule providing clear asset classification for the digital asset market or to provide comprehensive guidance has worsened the uncertainty within the digital asset ecosystem. The SEC has taken numerous enforcement actions against some digital asset trading platforms, accusing them of not registering as brokers, clearing agencies, or national securities exchanges (NSE) for trading digital asset securities.
Despite this history of recognizing ETH as a non-security digital asset, you have consistently refused to acknowledge that ETH is not a security. In your testimony before the House Financial Services Committee in March 2023, you refused to answer numerous questions about whether ETH would be considered a commodity. Your reluctance to clarify the treatment of ETH, as demonstrated by the Prometheum announcement, has further increased the confusion and uncertainty regarding ETH’s classification.
Your reluctance to determine which digital assets are so-called digital asset securities has created confusion even for entities regulated by the SEC.”
