Prometheum Launches First SEC-Compliant Ethereum Custody Service

Prometheum Launches First SEC-Compliant Ethereum Custody Service

LawSEC

By Jakub Lazurek

21 May 2024 (28 days ago)

3 min read

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Prometheum sets a new standard by launching the first SEC-compliant Ethereum custody service, targeting institutional clients and expanding to retail in 2024.

Prometheum, a digital asset firm based in New York, has launched the first SEC-compliant Ethereum (ETH) custody service, setting a new benchmark for regulatory compliance. This service treats ETH as a security in line with SEC rules. Initially, it targets institutional clients with plans to include retail customers by 2024. This move is significant as it addresses ongoing debates about whether ether should be classified as a security or commodity.

Prometheum started its ETH custody service with a select group of institutional clients, aiming for a full launch in early June. Co-CEO Aaron Kaplan emphasized, “This launch is a major step towards a regulated and secure digital asset market.” The service is tailored for asset management firms, hedge funds, banks, and registered investment advisors. Prometheum plans to expand to retail clients in 2024, offering comprehensive digital asset management under strict regulatory compliance.

In 2023, Prometheum obtained a special-purpose broker-dealer license from the Financial Industry Regulatory Authority (FINRA) and the SEC, showcasing its commitment to compliance despite industry resistance to classifying cryptocurrencies as securities. The regulatory landscape remains uncertain, with SEC Chair Gary Gensler suggesting Ethereum might be a security, while Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam views it as a commodity. In March, House Financial Services Committee Chair Patrick McHenry and House Agriculture Committee Chair Glenn Thompson asked the SEC to clarify Ethereum's status.

Prometheum believes in a clear legal framework for cryptocurrencies, demonstrated by its SEC-compliant ether custody service. Treating ETH as security aligns with SEC regulations, potentially setting a standard for other firms. As the SEC continues its regulatory efforts, Prometheum’s approach could validate this model and guide other companies toward compliance.

This launch is crucial for Prometheum and the digital asset market. It highlights the firm’s dedication to regulatory standards and the potential for a secure, regulated market for digital assets. This could inspire other digital asset firms to adopt similar compliance measures, fostering a more regulated cryptocurrency environment.

Prometheum’s service arrives at a time when regulatory clarity is much needed in the crypto industry. By leading with an SEC-compliant ETH custody service, Prometheum positions itself as a regulatory compliance leader, potentially shaping future regulations. If successful, this approach could provide a framework for integrating digital assets into the regulated financial system, enhancing investor protection and market stability.

Prometheum’s SEC-compliant Ethereum custody service marks a significant step forward in the digital asset industry. By treating ETH as a security and following SEC regulations, Prometheum sets a new industry standard. As the regulatory debate continues, Prometheum’s success could set a precedent for other firms, leading to a more transparent and stable environment for cryptocurrency investments.

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