Prometheum Launches Custodial Services for Ethereum
Prometheum, an “alternative” trading platform, has announced the launch of its custodial services for Ethereum (ETH). This move has significant implications for the legal status of Ethereum.
SEC Pressured to Determine Ethereum’s Legal Status
Prometheum has positioned itself as a compliant player in the crypto industry by operating within existing laws. It received regulatory approval in 2021 to operate as an alternative trading platform for securities and obtained a special-purpose broker-dealer license from FINRA. This unique license allows them to operate as a broker-dealer in “digital asset securities.” The company argues that Ethereum can be listed as a security under an exemption called Rule 144.
Backlash Against Prometheum’s Strategy
SEC Chair Gary Gensler, who has intensified enforcement efforts, has emphasized the sufficiency of existing rules. Prometheum’s approach contrasts with other crypto exchanges like Coinbase, drawing criticism from the industry and Republican lawmakers who accuse Gensler of supporting the firm to advance his regulatory agenda.
Hot Take: Prometheum’s Custodial Services Raise Questions About Ethereum’s Legal Classification
Prometheum’s launch of custodial services for Ethereum puts the spotlight on the debate over Ethereum’s legal classification. It could compel the SEC to determine whether Ethereum should be classified as a security, challenging the crypto industry’s argument for new laws. The success of Prometheum’s approach remains uncertain, and it will be interesting to see how subsequent SEC administrations respond and whether institutional investors are attracted to Prometheum’s compliant approach.
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