Just In: SEC Faces Probe Over Prometheum’s Plans to Custody ETH

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As a researcher with a background in financial regulations and digital assets, I find the ongoing debate between the House Financial Services Committee and the SEC regarding Prometheum’s Ethereum custody service a fascinating development. Given my experience in following regulatory developments in this space, I understand the implications of this issue for both the digital asset industry and traditional financial markets.

The House Financial Services Committee members are currently interrogating the Securities and Exchange Commission (SEC) regarding the regulatory ambiguity surrounding Prometheum’s recent initiative to offer custodial services for Ethereum‘s native digital token, Ether (ETH).

Patrick McHenry, the Chairman of the Committee, and French Hill and Bill Huizenga, the Chairmen of the Subcommittees, have voiced concerns over the SEC’s answers concerning the permissible actions for entities such as Prometheum, classified as Special Purpose Broker-Dealers (SPBDs).

As a crypto investor, I’ve recently come across some intriguing news regarding Prometheum’s Ethereum custody service. They have soft-launched this offering and categorized it as a security under existing federal laws. Now, I understand that this is a contentious issue within the industry, but from Prometheum’s perspective, they remain firm in their classification.

Clarification on Prometheum’s Plans to Custody ETH

In reaction to Prometheum’s latest announcement, the House Financial Services Committee has once again requested that the Securities and Exchange Commission (SEC) provide clearer answers. This is reflected in their recent letter to SEC Chair Gary Gensler, which asked if Special Purpose Broker-Dealers (SPBDs) are allowed to hold digital assets like Ethereum, as they currently lack regulation in this area.

Just In: SEC Faces Probe Over Prometheum’s Plans to Custody ETH

 

The lawmakers’ worries deepened when the SEC failed to provide an adequate response to their inquiry, which was submitted on March 26th.

I’ve recently come across some queries regarding Prometheum’s strategies and how they were executed despite potential risks to the crypto market. Let me clarify my perspective as a crypto investor. Essentially, these inquirers want to know what rules or circumstances allowed Prometheum to carry out its investment plans amidst market instability.

Promethium’s Custody Service

Aaron Kaplan, one of the co-founders of Prometheum, has led the company in taking an innovative step by registering Ethereum as a security under its custody. This move is part of Prometheum’s strategic initiative to attract asset managers, crypto hedge funds, and banks. Notably, this approach has gained approval from both FINRA and the SEC, making it a trailblazing precedent within the digital currency sector.

At present, the Securities and Exchange Commission (SEC) is deliberating over proposed Ethereum Spot Exchange Traded Funds (ETFs). The outcome of their decision may influence how Ethereum and associated services are categorized in future regulatory frameworks. Therefore, the introduction of this new service coincides with this ongoing SEC evaluation.

With the likelihood of a Spot Ethereum ETF being approved by the SEC rising to 75%, and the regulatory body asking firms to revise their 19b-4 applications, it is crucial to make this clarification clear.

Currently, Ethereum’s (ETH) price is on an upward trend, fueled by optimism surrounding a possible approval scheduled for Thursday. At this moment, ETH is priced at $3,735, representing a 0.50% increase from its lowest point within the day.

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2024-05-22 22:42