Published on February 7, 2024 at 3:06 PM.

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Prometheum Inc., the only crypto securities platform in the U.S. with regulatory approval, will offer custody services for Ethereum’s Ether (CRYPTO: ETH) to its clients.

What happened: Co-CEOs Aaron and Benjamin Kaplan, despite facing industry scrutiny and not generating revenue yet, plan to launch ETH custody services by the end of the upcoming month.

“ETH is just the first, and we plan to add many more,” said Aaron Kaplan in an interview with CoinDesk, emphasizing the company’s goal to cater to the market’s most significant and liquid tokens.

Prometheum aims to become a broker-dealer and crypto custodian. Their alternative trading system, expected to launch next quarter, will test if crypto operations can meet U.S. regulatory standards while offering a streamlined compliance framework compared to traditional exchanges.

This venture into regulated crypto custody and trading puts Prometheum at the forefront of determining whether the U.S. Securities and Exchange Commission (SEC) will classify ETH as a security, in contrast to the Commodity Futures Trading Commission’s (CFTC) classification of ETH as a commodity.

“CFTC is not our regulator,” stated Ben Kaplan, highlighting the firm’s commitment to align with the SEC’s guidance on ETH’s status.

Why it matters: Prometheum’s initiative as a “qualified custodian” is gaining significant interest, especially with the potential SEC rule requiring investment advisers to use qualified custodians for crypto assets. This could greatly benefit the company, aligning with SEC Chair Gary Gensler’s stance on current crypto exchange regulations.

Aaron also pointed out the company’s alignment with traditional financial firms’ compliance expectations and the opportunity in asset tokenization, which requires integrated trading, clearing, and settlement services.

However, the company’s future remains uncertain, as it is influenced by ongoing legal debates over the classification of crypto securities and the outcome of cases such as Coinbase Inc. (NASDAQ:COIN), which challenge the SEC’s definition of cryptocurrencies as securities.

In 2024, Bitcoin reached an all-time high before its halving. A trader predicts that history will repeat itself and Bitcoin will hit another all-time high before its next halving, with the potential for a volatile market.

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