- Despite industry skepticism, Prometheum secures SEC approval to register Ethereum as a security, challenging prevailing views.
- Targeting asset managers and banks, Prometheum’s Ethereum Custody service garners support from FINRA and the SEC.
Prometheum, has recently initiated the soft launch of its Ethereum Custody service, recognizing Ethereum as a security. This development marks a step in the digital currency sector and comes ahead of a full launch of crypto services anticipated later this quarter.
The news was first reported by Fortune, highlighting the unique nature of this service in the cryptocurrency realm.
Controversial blockchain firm Prometheum launches long-awaited Ethereum custody.
(via @FortuneCrypto) https://t.co/HX6FvjF5mU
— FORTUNE (@FortuneMagazine) May 20, 2024
Prometheum has taken a bold stand by classifying Ethereum, and potentially other assets, as securities under current Federal laws, a stance that has sparked debate within the digital currency community.
Despite skepticism from many industry leaders about the feasibility of such classification and registration with the U.S. Securities and Exchange Commission (SEC), Prometheum has successfully obtained approval.
The decision to feature Ethereum as the inaugural asset in its custody service was made in February, and the move aligns with the beliefs of the platform’s co-founder, Aaron Kaplan, who is a known advocate for adhering to SEC regulations.
“It eliminates a lot of the arguments that things can’t be done under existing laws”
Kaplan has expressed that this approach counters the argument that compliance with existing laws isn’t feasible for digital assets. He noted in a Fortune interview that this is the first instance of a digital asset security being managed and regulated under securities laws.
“It marks the first time that…an investment contract digital asset security is being custodied and treated under the securities laws.”
The Ethereum Custody service by Prometheum targets various institutional entities, including asset managers, crypto-focused hedge funds, and banks. This service is supported by regulatory authorities like the Financial Industry Regulatory Authority (FINRA) and the SEC, positioning Prometheum to integrate more deeply into the growing Ethereum market.
The timing of Prometheum’s launch is pivotal as it coincides with the SEC’s pending decision on the approval of a spot Ethereum ETF. Reports suggest that SEC Chairman Gary Gensler is leaning towards classifying Ethereum as a security, which could influence the agency’s decision to reject ETF proposals from companies like VanEck and Ark 21Shares.
However, Prometheum’s new custody service could provide the SEC with an alternative reference point for how Ethereum can be regulated as a security.
While the chances of ETF approval remain uncertain, some industry observers hold a sliver of hope for a last-minute positive verdict. Prometheum’s initiative could potentially sway regulatory perspectives, offering a structured and legally compliant method for handling Ethereum and possibly setting a precedent for other digital assets.
