Digital asset trading and custody company Promethium has reportedly launched a custodial service

Digital asset trading and custody company Prometheum has reportedly launched its controversial custodial service for Ethereum (ETH), which treats digital assets as collateral.

According to a May 20 report from Fortune, the incubation solution was rolled out to a select few companies on May 17, and is expected to roll out more broadly in June.

Prometheum targets its services towards asset management firms, hedge funds, banks and registered investment advisors and aims to expand to retail clients later in 2024.

Promethium was thrust into the spotlight in June last year after its co-founder and co-CEO Aaron Kaplan testified before a US House of Representatives committee, appearing to support the regulation of cryptocurrencies under existing securities laws – an opinion also shared by the Securities and Exchange Commission. . commission.

In February, Prometheum suggested it would treat Ethereum as a security when it launches custodial services on its platform later in the year – drawing criticism from the cryptocurrency community.

“It eliminates a lot of the arguments that things can’t be done under current laws,” explained Aaron Kaplan, one of the company’s executives.

“It is the first time that the digital assets of an investment contract have been kept secure and treated under securities laws.”

Some initially saw the SEC’s approval of Prometheum and its treatment of Ethereum as a bad sign for Ethereum ETFs.

source: Tony Edward

However, reports have since emerged that the SEC is asking applicants to expedite their 19b-4 applications, which has once again raised hopes.

This led Bloomberg ETF analysts Eric Balchunas and James Seyfart to raise their estimated odds for the approved Ether ETF from 25% to 75%.

Related: If the SEC approves Ethereum ETFs, many of them will “fall into extreme stealth.”

Brothers Aaron and Benjamin Kaplan founded Promethium in 2017, which remained relatively unknown until June 2023, when it received a broker-dealer license from the Securities and Exchange Commission and the Financial Industry Regulatory Authority.

However, the launch of Promethium’s Ethereum custody service could now cause a rift between the Securities and Exchange Commission and the US commodities regulator.

The Commodity Futures Trading Commission, which has long classified ether as a commodity, warned in March that such a product would put US financial market rules in direct conflict.

“This would then put our registrants, and our exchanges who list Ethereum as futures, in non-compliance with SEC rules rather than CFTC rules,” CFTC Chairman Rustin Behnam said at the time. (CFTC)”.

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