The Launch of Prometheum’s Ethereum Custody Service
Prometheum, a digital asset trading and custody firm, launched its Ethereum (ETH) custody service on Friday, May 17, 2024, with a full-scale launch planned for June. This move has sparked a debate about the classification of cryptocurrencies, as Prometheum treats Ethereum as a security under the U.S. Securities and Exchange Commission (SEC).
TLDR
- Prometheum launched Ethereum custody services, classifying ETH as a security under SEC regulations.
- Controversy arose over accusations of collaboration between Prometheum and the SEC to misclassify Ethereum.
- The SEC has not officially declared Ethereum a security but is operating under that assumption internally.
- Speculation suggests the SEC may approve spot Ethereum ETFs, classifying ETH as a commodity, not a security.
- Prometheum’s custody launch tests the company’s strategy to offer compliant crypto trading under securities laws.
Criticism from the Crypto Community
The launch of Prometheum’s Ethereum custody service has faced backlash from the crypto community, with allegations of collusion with the SEC to misclassify Ethereum. The Cedar Innovation Foundation, a crypto advocacy group, criticized the move, stating:
“This announcement is simply the latest attempt orchestrated by the SEC to drive the crypto market out of the United States. The SEC and Prometheum stand alone in their claim that ETH is a security.”
Despite the lack of an official declaration from the SEC, there are claims that the agency has been treating Ethereum as a security since March 2023. In contrast, the Commodity Futures Trading Commission (CFTC) views Ethereum as a commodity, leading to regulatory concerns in the financial markets.
Hopes for Spot Ethereum ETFs
Amid the controversy, speculation has surfaced about the SEC potentially approving spot Ethereum exchange-traded funds (ETFs). Analysts believe political pressure may influence the SEC’s stance, with the proposed ETFs categorizing Ethereum as a commodity instead of a digital asset security.
Prometheum, founded by the Kaplan brothers in 2017, advocates for crypto trading under existing securities laws. The company obtained a broker-dealer license from the SEC and FINRA in June 2023, enabling it to custody digital asset securities. Prometheum’s co-CEO, Aaron Kaplan, believes the Ethereum custody launch validates existing legal frameworks for crypto trading.
Hot Take: The Future of Ethereum Classification
The controversy surrounding Prometheum’s Ethereum custody service and the debate over Ethereum’s classification as a security or commodity highlight the complexities of regulatory frameworks in the crypto space. As the SEC’s stance evolves and speculation grows about spot Ethereum ETFs, the industry continues to navigate the intersection of cryptocurrencies and traditional financial regulations.
Sources:
– Decrypt
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