Several members of the US House of Representatives have sent a letter to the SEC demanding an explanation of the legality of digital asset broker Prometheum’s cryptocurrency operations.
In February, the company announced plans to custody Ethereum for its clients, with the service expected to launch in the second quarter.
The senators, most of whom are Republicans, stated in the document that ETH is not a security, making its use in Prometheum’s operations illegal.
Lawmakers also criticized SEC Chairman Gary Gensler’s reluctance to explicitly classify Ethereum as a security.
“Your unwillingness to clarify the handling of ETH only exacerbates confusion and uncertainty regarding the asset’s classification, as evidenced by Prometheum’s announcements,” the letter states.
Gensler has repeatedly cited Prometheum as an example of a firm striving to meet necessary regulatory requirements for legal cryptocurrency operations in the US.
Representatives of the brokerage company stated that their work does not involve registering assets that will be stored and sold as part of the business.
Ember Capital, a firm within the Prometheum structure, was the first to receive a special purpose license to provide services related to digital securities.
“Allowing one market participant and regulator to dictate the future of digital assets through coercion is unacceptable,” the lawmakers assert.
In July 2023, US Republican Senator Tommy Tuberville urged the Department of Justice and the SEC to investigate Prometheum’s activities. He suspected the company’s CEO, Aaron Kaplan, of perjury during Congressional hearings and violating securities laws.
Previously, US senators had urged the Commission not to approve new crypto ETFs, citing the “enormous risks” of the instrument.
In March 2024, the Switzerland-registered non-profit organization Ethereum Foundation reportedly received a confidential request from an unnamed “government body” regarding the status of ETH.