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Prometheum, a digital asset trading and custody firm, has discreetly launched its much-debated Ether (ETH) custody service, which controversially treats digital assets as securities.&nbsp;
According to a May 20 report from<a href="https://fortune.com/crypto/2024/05/20/controversial-digital-assets-firm-prometheum-launches-long-awaited-ether-custody-argues-that-existing-laws-work-for-crypto/" rel="noopener noreferrer nofollow"> Fortune</a>, this service was made available to a select group of companies on May 17, with plans for a broader rollout in June.
<h2 id="span-style-font-weight-400-prometheum-targets-asset-management-firms-span">Prometheum Targets Asset Management Firms</h2>
Prometheum is targeting its new custody solution at asset management firms, hedge funds, banks, and registered investment advisors, with intentions to extend its services to retail clients later in 2024. This strategic focus aligns with the firm’s broader ambition to bridge traditional finance with the evolving world of digital assets.
The spotlight first shone on Prometheum in June last year when co-founder and co-CEO Aaron Kaplan testified before a United States House Committee, expressing support for regulating cryptocurrencies under existing securities laws—a stance that mirrors the perspective of the<a href="https://thecoinrise.com/sec-chair-gensler-frustrated-by-crypto-focus-defends-regulatory-actions/" rel="noopener noreferrer nofollow"> Securities and Exchange Commission (SEC)</a>.
<h3 id="span-style-font-weight-400-classification-of-ether-as-a-security-by-prometheum-span">Classification of Ether as a Security by Prometheum</h3>
In a bold move in February, Prometheum announced its intention to classify Ether as a security upon the launch of its custodial services, drawing significant criticism from the crypto community.&nbsp;
Kaplan defended this approach, stating, “It eliminates a lot of the arguments that things can’t be done under existing laws.” He emphasized that this marks a significant milestone: “It marks the first time that… an investment contract digital asset security is being custodied and treated under the securities laws.”
<h2 id="span-style-font-weight-400-approval-of-spot-eth-etfs-span">Approval of Spot ETH ETFs</h2>
This stance by Prometheum initially raised concerns among some industry observers, who saw the SEC’s endorsement as a negative signal for the<a href="https://thecoinrise.com/ethereum-etf-proposal-ark-and-21shares-abandon-staking-plans/" rel="noopener noreferrer nofollow"> approval of spot Ether ETFs</a>.&nbsp;
However, subsequent reports suggested that the SEC is urging applicants to expedite their 19b-4 filings, reviving optimism. This development led Bloomberg ETF analysts Eric Balchunas and James Seyffart to increase their estimated odds of an approved spot Ether ETF from 25% to 75%.
Prometheum, founded by brothers Aaron and Benjamin Kaplan in 2017, remained relatively under the radar until June 2023, when it secured a broker-dealer license from the SEC and the Financial Industry Regulatory Authority. This pivotal moment marked the beginning of the firm’s more prominent role in the digital asset industry.
<h3 id="span-style-font-weight-400-tensions-between-the-sec-and-the-cftc-span">Tensions Between the SEC and the CFTC</h3>
However, the launch of Prometheum’s Ethereum custody service could potentially exacerbate tensions between the SEC and the U.S. Commodity Futures Trading Commission (CFTC). The CFTC has consistently classified Ether as a commodity, and in March, it warned that treating Ether as a security would create a regulatory conflict within U.S. financial markets.
<a href="https://thecoinrise.com/sec-decision-on-ether-custody-raises-concerns-cftc-chairman/" rel="noopener noreferrer nofollow">CFTC Chair Rostin Behnam highlighted the potential repercussions</a>, stating, “It will then put our registrants, our exchanges who list Ether as a futures contract sort of in non-compliance of SEC rules as opposed to CFTC rules.” This regulatory discord underscores the complexity of integrating digital assets into the existing legal framework.
The post <a href="https://thecoinrise.com/prometheum-soft-launches-controversial-ether-custody-service/" rel="noopener noreferrer nofollow">Prometheum Soft-Launches Controversial Ether Custody Service</a> appeared first on <a href="https://thecoinrise.com" rel="noopener noreferrer nofollow">Latest News and Insights on Blockchain, Cryptocurrency, and Investing</a>.

Prometheum Soft-Launches Controversial Ether Custody Service

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