Clarksville Times

House Financial Services Committee Chairman Patrick McHenry (NC-10), Digital Assets, Financial Technology and Inclusion Subcommittee Chairman French Hill (AR-02), and Oversight and Investigations Subcommittee Chairman Bill Huizenga (MI-04) have sent a letter to Securities and Exchange Commission (SEC) Chair Gary Gensler. The lawmakers are demanding the SEC clarify its position regarding Prometheum’s recent announcement that it will offer custody services for Ethereum’s token, Ether (ETH).

This request follows the SEC’s response to a March 26 letter from Republicans, which failed to address demands to clarify that the SEC’s current regime does not permit Special Purpose Broker Dealer (SPBD) custody of non-security digital assets. Lawmakers have expressed concerns that allowing Prometheum to proceed could have significant consequences for the digital asset markets. Both Chairman Patrick McHenry and House Committee on Agriculture Chairman Glenn “GT” Thompson (PA-15) have resubmitted the questions included in the Republicans' March letter.

The lawmakers' letter states: “On March 26, 2024, Members of the House Committee on Financial Services and the House Committee on Agriculture sent you a letter requesting, among other things, clarification on how Prometheum, Inc. (Prometheum) will comply with its requirements as a Special Purpose Broker Dealer (SPBD) if it offers institutional custodial services for Ethereum’s token, Ether (ETH). The Securities and Exchange Commission’s (SEC) April 9, 2024 response failed to sufficiently describe how Prometheum will comply with its SPBD obligations with respect to ETH.”

The letter further highlights concerns about Prometheum's announcement: “Prometheum’s announcement that it will offer custody services for ETH raises a number of questions regarding what are, and what are not, permitted activities for SPBDs. These questions largely stem from the regulatory uncertainty surrounding ETH, as outlined in our March 26, 2024 letter. Without answers, which the SEC has refused to provide, our concerns about the precedent being set by the SEC, Financial Industry Regulatory Authority (FINRA), and Prometheum are growing.”

The lawmakers also pointed out: “The likelihood that throughout the course of Prometheum’s SPBD application process and eventual approval, the SEC and FINRA likely discussed permitted activities for an SPBD is strong. As such, the Committee on Financial Services is seeking additional information including communications to provide additional clarity regarding the SPBD framework.”