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23/05/24
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U.S. Reps Ask SEC to Provide Communications with FINRA Regarding Prometheum’s ETH Offering
On May 22, Chairman of the House Financial Services Committee Patrick McHenry and subcommittee heads Bill Huizenga and French Hill sent a letter to the chair of the U.S. SEC Gary Gensler regarding Prometheum’s institutional custodial services for Ether (ETH).
Specifically, they are asking the SEC to clarify how Prometheum will comply with its requirements as a Special Purpose Broker Dealer (SPBD) as the firm’s announcement that it will provide custody services for ETH raises several questions about the activities permitted for SPBDs.
The letter noted that the commission had failed to provide a sufficient description of how the firm will comply with its SPBD obligations with respect to ETH in its response to questions asked by members of the House Committee on Financial Services and the House Committee on Agriculture two months ago.
“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,” reads the letter on May 22.
The representatives believe that the SEC and FINRA likely discussed permitted activities for a SPBD when Prometheum applied as a SPBD. Hence, they are asking the commission to provide more information, including communications between the SEC and FINRA, for additional clarity regarding the SPBD framework.
The SEC is required to provide all non-public records and communications with FINRA regarding this issue, including those “related to regulatory classification of ETH, from 2014 to present, as soon as possible, but no later than 5:00 p.m. on Wednesday, June 5, 2024.”
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