Prometheum Soft Launches Ether Custody Services in the US, Treating it as a Security

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Prometheum Soft Launches Ether Custody Services in the US, Treating it as a Security

Prometheum Capital LLC soft launches Ether custody and treats it as security under the SEC. The service was initially planned to be launched in the first quarter of 2024 but was launched Friday with an unspecified number of companies before its full commercial launch in June. The Block and Fortune then elaborated on the news. Aaron Kaplan, co-CEO of Prometheum, shared that the trading services would begin in a quarter.

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Prometheum’s Approach Under Existing Laws.

Kaplan stressed that this launch shows that the operations of digital asset custody are possible under existing laws. Kaplan told Fortune: “It eliminates a lot of the arguments that things can’t be done under existing laws. ”It is the first digital token whose investment contract security is being held and regulated under the Securities Act.

Prometheum was allowed by FINRA to offer crypto clearing and settlement services through a special purpose broker-dealer license in December 2021, and the SEC granted Prometheum that license in May 2023.

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Controversy and Regulatory Landscape

Prometheum’s position on crypto tokens being securities has met the opposition of the blockchain industry. The argument that the firm makes is that there already exists a legal roadmap for crypto in the United States by running separate custodial and trading companies under SEC and FINRA licenses. The SEC has always reminded crypto exchanges to register, arguing that their operation as unregistered entities attracts charges from major players such as Coinbase, Binance, and Kraken.

SEC Chair Gary Gensler has stated that ether could be a security measure, while CFTC Chair Rostin Behnam has said ether is a commodity and a concern for the industry. The SEC will be forced to make a conclusive decision with Prometheum’s ether custody service.

In March, Patrick McHenry, the chair of the House Financial Services Committee, and Glenn Thompson, the chair of the House Agriculture Committee, reiterated the need for the SEC to decide whether ether is a security. This month, an SEC filing suggested the agency could classify ether as a security, which would make any further regulation much more difficult. Thus, Prometheum’s decision to release custody services for ether under federal securities laws alongside regulatory discussions is a notable step for the firm within the dynamic crypto industry.

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