Controversial Crypto Firm Prometheum to Treat Uniswap and Arbitrum’s Tokens as Securities

As an experienced crypto investor with a keen eye for regulatory compliance, I find Prometheum’s approach to be both strategic and pragmatic. While it may seem counterintuitive to some in the industry, their decision to align with the SEC’s view on tokens as securities is a smart move. It positions them as a reliable player in the eyes of institutional investors who are more comfortable operating within regulated spaces.

Prometheum continues to progress with its plan to adhere to the U.S. Securities and Exchange Commission’s stance on cryptocurrency trades. By accepting two additional tokens into its secure storage service designed for cryptocurrency securities, it doesn’t matter whether other sectors in the industry align or not.

According to Benjamin Kaplan, CEO of Prometheum Capital’s subsidiary, they see federal securities laws as the foundation for investor safeguards that have been proven effective. In response to questions, he stated, “Our aim has always been to establish a regulated system that enables investors to engage in the digital asset market responsibly.”

Prometheum stands out in the sector as it’s the pioneer and currently the sole entity structured specifically as a broker-dealer for cryptocurrency assets. It’s officially registered as a custodian, facilitating the execution, clearing, and settlement of digital asset trades. Previously, company representatives had predicted that it would evolve into a comprehensive platform for crypto transactions. However, these expectations have proven overly ambitious, and now, Kaplan only commits to it becoming a one-stop shop “following the complete deployment of its custodial service.”

As a researcher, I find myself aligning with the SEC’s viewpoint, which places my organization at odds with many of our peers within the sector. Notably, SEC Chair Gary Gensler has singled out our company as a potential model for how cryptocurrency should be executed correctly. To date, the regulator has not openly challenged our business strategy, but we have only moved forward with a “soft launch” in May, without providing specifics about what this entails or whether we are currently generating income.

Apart from confirming, he remained tight-lipped on whether the company had been offered support by the SEC regarding its business structure. However, he did mention that the company regularly communicates with the regulatory body as part of routine business operations.

Should institutional clients approach them later this year, the company argues that their blockchain-supported custody service provides greater transparency and eliminates the expenses associated with intermediaries like transfer agents, such as these parties’ fees.

1. The company’s declaration about holding Ethereum for clients sparked doubts among certain critics, and the Chairman of the Commodity Futures Trading Commission, Rostin Behnam, admitted during a congressional hearing that a securities firm dealing with Ethereum might violate his commission’s ruling classifying that token as a commodity.

In a May blog post, Uniswap Labs stated that the Securities and Exchange Commission (SEC) is attempting to broaden its authority from just exchanges to encompass communications technology and not just securities markets but all markets as well. They contend that the legal arguments put forward by the SEC are questionable and have already been contradicted by court decisions.