- Congress demands clarity on Ethereum’s status after ETF approvals stall.
- ETF decision delays prompt calls for definitive crypto regulations.
- SEC asked to provide comprehensive guidance on crypto assets.
In the crypto ecosystem, Ethereum is a key player and the biggest platform for DeFi and decentralized applications. However, its regulatory status remains uncertain, especially as the Securities and Exchange Commission (SEC) deliberates on approving ETH-based Exchange-Traded Funds (ETFs).
Recent developments have seen a group of US lawmakers stepping into the fray, seeking clarity from the SEC regarding Ethereum’s classification and the broader regulatory definitions affecting digital assets.
Lawmakers Demand SEC Clarity
On Tuesday, March 26, a group of Republican lawmakers, led by prominent figures in the House Financial Services Committee and House Committee on Agriculture, wrote a letter to the SEC, asking for clarity on digital assets, specifically Ethereum.
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The letter, signed by 48 lawmakers, directly responds to Prometheum Capital, which will offer custody services for ETH to institutional clients later this month. Lawmakers inquired whether Special Purpose Broker-Dealers (SPBD) can have custody over non-security digital assets like Ethereum.
Lawmakers remarked that the Commodity Futures Trading Commission (CFTC) and the SEC have a record of classifying Ethereum as not a security. However, they also stated that the SEC has hesitated to classify ETH, which has led to heightened uncertainty expressly.
The letter also delves into the broader implications of the SEC’s regulatory approach. It emphasizes the potential negative effects on the digital asset markets. A lack of clear guidelines and consistent regulatory policy could impact Ethereum’s derivatives market and influence the broader digital asset landscape.
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The SEC’s wavering is already impacting several major institutions that have filed applications for Ethereum ETFs.
SEC’s Postpones Decision on Ethereum ETFs
The SEC has recently postponed its decision on the applications for Ether (ETH) Exchange-Traded Funds (ETFs) from major financial institutions like BlackRock and Fidelity. These delays come despite previous approvals for Bitcoin-based ETFs.
Final deadlines for these decisions have been extended to May 2024, reflecting the SEC’s ongoing evaluation process and its call for public comments on these ETF applications. Moreover, recent reports revealed that the SEC is looking to classify Ethereum as a security, a move that would most likely block Ethereum ETFs.
This postponement of the decision and the latest investigations have raised doubts among traders about the approval of Ethereum ETFs. A Bloomberg analysis put the approval odds at just 25% due to the SEC’s lack of engagement with the process.
On the Flipside
- Despite the calls for a new framework on digital assets, the SEC has maintained that current regulation is enough.
- SEC Commissioner Hester Peirce has been a vocal critic of the agency’s approach to digital assets, spearheading the call for regulatory clarity.
Why This Matters
Ethereum’s role as a foundational platform for DeFi, NFTs, and other decentralized applications makes its regulatory classification a pivotal issue for stakeholders in the crypto space.
Read more about Ethereum ETF’s winning approval by the SEC:
Ethereum ETF Approval Odds Dim to 25% Due to SEC’s Inaction
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