Prometheum, a firm specializing in trading and safeguarding digital assets, has reportedly soft-launched its controversial Ether (ETH) custody service, treating digital assets as securities. The custody solution was initially made available to a select few companies on May 17, with a full-scale launch planned for June. Prometheum aims to target asset management firms, hedge funds, banks, and registered investment advisers, with plans to expand its services to retail clients in 2024.
Prometheum gained attention in June of last year when its co-founder and co-CEO, Aaron Kaplan, testified before a United States House Committee, expressing support for regulating crypto under existing securities laws, a sentiment shared by the Securities and Exchange Commission (SEC). In February, Prometheum announced its intention to treat Ether as a security when launching custodial services later in the year, which received criticism from the crypto community. Kaplan explained that this approach eliminates many arguments against compliance with existing laws. Some initially viewed the SEC’s approval of Prometheum’s treatment of Ether as a negative signal for spot Ether exchange-traded funds (ETFs).
However, recent reports indicate that the SEC is urging applicants to expedite their 19b-4 filings, raising hopes for the approval of spot Ether ETFs. Bloomberg ETF analysts Eric Balchunas and James Seyffart subsequently increased their estimated chances of an approved spot Ether ETF from 25% to 75%. Prometheum was founded by brothers Aaron and Benjamin Kaplan in 2017 and gained recognition in June 2023 when it obtained a broker-dealer license from the SEC and the Financial Industry Regulatory Authority.
Prometheum’s launch of its Ether custody service could potentially create a divide between the SEC and the U.S. commodities regulator. The Commodity Futures Trading Commission, which has classified Ether as a commodity for a long time, warned in March that such a product would directly conflict with U.S. financial market rules. CFTC Chair Rostin Behnam stated that it would put registrants and exchanges listing Ether futures contracts in non-compliance with SEC rules.