Much of the crypto sector has been apprehensive about the ribbon cutting on Prometheum’s custody and trading operations, which the firm said will fully comply with U.S. Securities and Exchange Commission (SEC) demands. The doors have so far stayed shut well past the target date, but the company explained it’s still finishing a process for auditing smart contracts.
House Republicans Demand SEC Explain What’s Up With Crypto Platform Prometheum
As Prometheum Inc. nears an unprecedented moment in U.S. crypto history by beginning a custody operation that intends to hold customers’ Ethereum tokens {{ETH}}, the industry’s friends in Congress are demanding the Securities and Exchange Commission (SEC) explain what it means to do about this first U.S. special purpose broker-dealer (SPBD) for digital assets.
Prometheum Taps Morgan Stanley Exec as CFO Just Before Opening Doors
Controversial crypto platform Prometheum continues to signal its seriousness about moving forward as the industry’s sole U.S. special-purpose crypto broker-dealer, having now hired a chief financial officer with a Wall Street pedigree from the likes of Morgan Stanley and Goldman Sachs Group Inc.
Prometheum’s Ethereum Custodial Launch Puts SEC’s ETH Classification In The Spotlight
Prometheum, an “alternative” trading platform for crypto “securities” assets, has recently announced the launch of its custodial services for Ethereum (ETH). This move has significant implications for the legal status of the second-largest cryptocurrency by market capitalization.
Fortune Magazine reported that the company’s strategy is to compel regulators, particularly the Securities and Exchange Commission (SEC), to recognize Ethereum as a security.
SEC Pressured To Settle Ethereum Legal Status
Per the report, Prometheum, based in New York, has positioned itself as a compliant player in the crypto industry by claiming to have discovered a path to operate within existing laws.
The company received regulatory approval in 2021 to operate as an alternative trading platform for securities. It gained further attention when it obtained a special-purpose broker-dealer license from the Financial Industry Regulatory Authority (FINRA).
The license allows them to operate as a broker-dealer in “digital asset securities,” a designation no other firm has achieved. This has prompted crypto companies and even members of the US Congress to call for investigations into the firm’s activities.
Previously, the SEC refrained from definitively classifying Ethereum as a security despite declaring several other cryptocurrencies as such.
Prometheum aligns with the SEC’s assessment that most cryptocurrencies are securities and argues that Ethereum can be listed as a security under an exemption called Rule 144, typically used for trading restricted stocks.
The embattled company claims it can use blockchain data to determine whether the assets have been circulating for over a year, a crucial factor in claiming the exemption.
What’s interesting is that Prometheum’s custodial services for Ethereum could potentially force the SEC to determine Ethereum’s legal status. The company’s registered status with FINRA and the SEC, prominently displayed on its website, adds weight to its claim.
Legal experts and academics speculated that the SEC may be forced to rule on Ethereum’s classification due to Prometheum’s custodial launch. This decision could have far-reaching consequences for the crypto industry, challenging the industry’s argument that cryptocurrencies cannot operate under existing securities laws.
Backlash Mounts As Prometheum Shakes Up Crypto Regulations
SEC Chair Gary Gensler, who has intensified enforcement efforts following the collapse of FTX, has emphasized the sufficiency of existing rules while filing lawsuits against exchanges for failing to register with the agency.
Prometheum’s approach contrasts with other crypto exchanges like Coinbase, which argue that the existing rules are outdated. Prometheum’s strategy has drawn criticism from the crypto industry and Republican lawmakers who accuse Gensler of supporting the firm to advance his regulatory agenda.
Overall, Prometheum’s introduction of Ethereum custodial services has thrust the debate over Ethereum’s legal classification into the spotlight.
This move could compel the SEC to decide whether Ethereum should be classified as a security, challenging the crypto industry’s argument for new laws.
While the success of Prometheum’s approach is still uncertain, it remains to be seen how subsequent SEC administrations will respond and whether institutional investors will be attracted to Prometheum’s compliant approach.
Currently, ETH is trading at $2,428, reflecting a marginal 0.5% price increase in the last 24 hours.
Featured image from Shutterstock, chart from TradingView.com
Ether’s Prometheum Test
The “only U.S.-registered crypto securities platform” is listing ETH in a bold test of the U.S. Securities and Exchange Commission’s thesis that most cryptocurrencies are securities.
Prometheum, the Only U.S.-Registered Crypto Platform, Picks Ether as Its First Product
Prometheum Inc. – still standing alone as the only U.S.-registered crypto securities platform – has disclosed that the first digital asset it’ll handle for clients will be ether {{ETH}}.
Prometheum Earns Final Regulatory Nod to Try Hand at Fully-Compliant Crypto
Prometheum Inc., with the latest regulatory notch on its belt, is about to finally test whether a viable crypto platform can operate entirely within U.S. Securities and Exchange Commission (SEC) regulations.
How are crypto firms responding to US regulators’ enforcement actions?
Prometheum was purportedly “purpose-built to comply with federal securities laws” and has avoided lawsuits from the SEC when compared with firms like Binance and Coinbase.
Republican Lawmakers Demand Gensler Tell Them How Prometheum Got SEC Approval
Republicans on the U.S. congressional committee that oversees the Securities and Exchange Commission (SEC) are demanding agency Chair Gary Gensler explain how Prometheum Inc. won its unique approval as a broker-dealer for crypto.
Congressman Torres Calls for Investigation Into SEC Over its Approach to Crypto
Congressman Ritchie Torres has asked for two separate independent investigations of the U.S. Securities Exchange Commission (SEC) for its “haphazard and heavy-handed approach to digital assets.”
U.S. Senator Tuberville Asks DOJ, SEC to Investigate Crypto Broker Prometheum
U.S. Senator Thomas Tuberville (R-Ala.) wrote an open letter to Attorney General Merrick Garland and Securities and Exchange Commission (SEC) Chair Gary Gensler asking them to investigate Prometheum, a special-purpose broker that recently secured federal permissions to offer crypto trading services.
The Crypto Industry’s New Favorite Punching Bag – Prometheum – Asks for a Chance
No new crypto rules are needed, said Aaron Kaplan, co-CEO of Prometheum Inc., and his company means to demonstrate it – even as the issuers whose tokens it seeks to trade say no thanks.
Blockchain Assoc. requests info on Prometheum over ‘suspicious’ approval
A FOIA request with the SEC regarding Prometheum has been filed, while others found former FINRA and SEC staffers among the firm’s ranks.
Crypto Lobbyists Ask SEC for Info on Prometheum, The Mysterious ‘Regulated’ Crypto Firm
The “regulated crypto exchange” backed Gary Gensler’s viewpoint in front of Congress. But are they for real?
‘Who the hell’ is Prometheum and what did it say to Congress about SEC compliance?
A testimony given at a U.S. House hearing by the blockchain firm’s co-founder Aaron Kaplan has drawn the attention of those in the crypto space.
Gary Gensler’s Catch-22 Vision of ‘Regulated’ Crypto Brokers
The SEC-registered trading platform Prometheum pitched the House on Gary Gensler’s vision. But skeptical legislators highlighted that the platform won’t offer major assets, including Bitcoin.