Prometheum Launches SEC-Compliant Ether Custody Service

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Prometheum, a New York-based digital asset firm, has launched the first SEC-compliant Ethereum (ETH) custody service, marking a new milestone for regulatory compliance in the industry.

This service treats ETH as a security in line with U.S. Securities and Exchange Commission (SEC) regulations.

Prometheum Pioneers Regulated Ethereum Custody Service

Prometheum, known for its controversial stance on digital assets, started its ETH custody service with a select group of companies. The full-scale launch is set for the first week of June. Co-CEO Aaron Kaplan highlighted this is the first instance where an investment contract involving a digital asset has been custodied and treated under securities laws.

“This launch is a significant step towards a regulated and secure digital asset market,” said Kaplan.

Prometheum designed the service for institutional clients such as asset management firms, hedge funds, banks, and registered investment advisors. The company aims to expand to retail clients within 2024, offering comprehensive digital asset management under strict regulatory compliance.

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In 2023, Prometheum secured a special-purpose broker-dealer license from the Financial Industry Regulatory Authority (FINRA) and the SEC. Despite this achievement, many industry leaders oppose classifying cryptocurrencies as securities, which contrasts with Prometheum’s approach.

The regulatory discrepancy adds to this uncertainty. SEC Chair Gary Gensler suggested that Ethereum might be a security. Commodity Futures Trading Commission Chair Rostin Behnam, however, views it as a commodity. In March, House Financial Services Committee Chair Patrick McHenry and House Agriculture Committee Chair Glenn Thompson urged the SEC to clarify ETH classification.

Prometheum believes a clear legal path for crypto exists and demonstrates this through its ether custody service. As the SEC continues to enforce its regulations, Prometheum’s move may set a precedent for other firms. If successful, it could validate the SEC’s regulatory framework and serve as a model for other digital asset companies seeking compliance.

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