tl;dr
A crypto advocacy group accuses Prometheum of aligning with the SEC by offering Ethereum custody services, classifying it as a security. The group alleges that this move is part of the SEC's effort to drive the crypto market out of the US. While the CFTC considers Ethereum a commodity, Prometheum's ...
A crypto advocacy group accuses Prometheum of aligning with the SEC by offering Ethereum custody services, classifying it as a security. The group alleges that this move is part of the SEC's effort to drive the crypto market out of the US. While the CFTC considers Ethereum a commodity, Prometheum's initiative challenges this notion. The organization claims that Prometheum's actions are a desperate attempt to misclassify Ethereum and urges Congress to intervene.
Speculation suggests the SEC may soon approve spot Ethereum ETFs, in contrast to its recent skepticism. Prometheum's co-CEO previously testified before Congress on SEC regulation, and the firm has been working towards SEC compliance, drawing criticism from the crypto industry. The Cedar Innovation Foundation, while focused on crypto education, has been associated with political advertisements against certain lawmakers.
A crypto advocacy group that’s targeted industry skeptics on Capitol Hill is sounding off against Prometheum, accusing the much-contested crypto firm of carrying water for the U.S. Securities and Exchange Commission (SEC) with its emergent Ethereum business. Prometheum launched custody services for Ethereum on Friday, offering to safeguard the asset on customers’ behalf after months of anticipation, per Fortune . The catch: Prometheum's service classifies Ethereum as a security under the SEC’s remit. The SEC has not yet made this declaration, though the agency has been accused of internally operating on that premise amid its ever-expanding crypto industry crackdown.
“This announcement is simply the latest attempt orchestrated by the SEC to drive the crypto market out of the United States,” the Cedar Innovation Foundation said of the Prometheum offering in a statement. “The SEC and Prometheum stand alone in their claim that ETH is a security.” While U.S. financial regulators like the Commodity Futures Trading Commission (CFTC) have asserted that Ethereum is a commodity, Prometheum’s business could disrupt that notion. As the SEC has accused crypto exchanges of flouting securities laws, Prometheum has also sought out novel licenses to offer digital asset trading. Arguing its business has satisfied regulatory requirements where others have not, Prometheum has drawn widespread ire in an industry that advocates say is maligned with uncertainty.
“It’s time for Congress to put an end to Gensler’s political machinations,” said the organization, calling out SEC Chair Gary Gensler. However, the ruckus around Prometheum was largely overshadowed Monday by speculation that the SEC could soon approve spot Ethereum ETFs —a stunning about-face compared to growing skepticism around such prospects in recent weeks. Positing that a change in the SEC's posture was motivated by political pressure, Bloomberg ETF analysts Eric Balchunas and James Seyffart raised their approval odds to 75% from 25%.
The proposed ETFs classify Ethereum as a commodity—not a digital asset security as Prometheum's business does. Prometheum burst onto the crypto scene last summer after its co-CEO Aaron Kaplan testified before Congress about the SEC’s regulatory approach to crypto. Saying the SEC had clearly laid out a path to compliance for firms, Kaplan’s comments proved controversial as the little-known firm touted its unique membership with the Financial Industry Regulatory Authority (FINRA). Since then, Prometheum has worked steadily towards achieving that goal, much to the crypto industry’s chagrin.
While the Cedar Innovation Foundation notes on its website that crypto education is core to its mission, the organization has also been linked to spending on political advertisements against lawmakers like Sherrod Brown (D-OH), who has publicly warned against crypto’s risks before.