Even the US Congress is asking for clarification if ETH is a security

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A group of 48 United States legislators wrote a letter addressed to Gary Gensler, chairman of the Securities and Exchange Commission (SEC), in which they demand that he clarify whether ether (ETH), Ethereum’s cryptocurrency, is or not a value title.

The letter was sent to the SEC a few days ago, in a context in which the cryptocurrency market is in expectation for possible approval or rejection from an Ethereum ETF. Hence, lawmakers criticize Gensler’s unwillingness to directly say whether or not ether is a security.

The legislators demanding clarifications from Gensler are led by Republicans Patrick McHenry and Glenn Thompson, chairmen of the Financial Services and Agriculture committees, respectively. Although the signatories insist that ETH is not a security, draw attention to the doubts that exist.

Gensler is told that “despite his insistence that most digital assets are securities, that term remains undefined. Other regulators, intermediaries and market participants disagree with his statements and have had difficulties classifying crypto assets.

They thus remember what the president of the SEC has said on other occasions in which he has only been emphatic in pointing out bitcoin (BTC) as a commodity (commodity), leaving doubts about the other cryptocurrencies. A claim that has been refuted by bodies such as the Commodity Futures Trading Commission (CFTC), which insists that ether is a commodity.

In that sense, legislators mentioned the difficulties that the SEC chairman had in saying whether or not ETH was a security when he was questioned by Congress last year. Based on this, they criticized the official’s unwillingness to speak directly.

So far, Gensler has refused to openly classify ETH, although he has noted that a feature of Ethereum’s software could lead to it falling under his watch.

Their unwillingness to clarify the treatment of ETH creates confusion regarding the cryptoasset’s classification. This is because the mere failure of the SEC to propose a rule or provide comprehensive guidance that establishes clear rules for the market exacerbates uncertainty in the ecosystem.

Letter from legislators addressed to Gary Gensler.

“The negative repercussions of the SEC implicitly or directly classifying ETH as a security will cascade throughout the digital asset market in both the short and long term,” the lawmakers warned, citing How financial products derived from cryptocurrency could be affected.

If ETH is a security, there will be many repercussions in the market

In their letter, the legislators talk about the Prometheum case, a regulated platform that plans to launch services with ETH and is awaiting approval from the SEC.

In its authorization request, the company already classifies the cryptoasset as a value. “We face an alarming scenario in which the intention is to offer custody for ETH under a regime that does not allow such activity,” the legislators note.

If ether qualifies as a security, the legal treatment of an Ethereum ETF would be different from that of a Bitcoin ETF. There would also be repercussions for companies and investors that already interact with or rely on Ethereum, including major exchanges like CME Group and Cboe Global Exchange that trade millions of dollars in ETH futures per day.

Additionally, a possible classification of ETH as a security would greatly affect the performance of ETH and the market, as it is the second largest cryptocurrency by capitalization after bitcoin. The fact would trigger the implementation of a series of changes and new compliance rules, which many within the ecosystem do not consider appropriate for this type of asset.

Until now There has been no reaction from Gensler to the legislators’ letter. As CriptoNoticias has reported, it is known that the SEC has been investigating the nature of ETH and its related companies, potentially preparing a response about his vision of the crypto asset.

Apparently, the Ethereum network’s switch to the proof-of-stake mechanism provided the agency with a new pretext to give ether another classification.

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