Doors Open at Prometheum as Much-Disputed Firm Tests Crypto Tokens as Securities

The controversial company is open for custody of digital securities, adding Optimism and The Graph to its list, though most of the industry disagrees on securities labels for most tokens.

Prometheum, a crypto special-purpose broker dealer, has opened its doors for institutions to custody digital securities, adding Optimism and The Graph to its list.

The move comes amid a broader industry dispute with the U.S. Securities and Exchange Commission (SEC) over the agency's labeling of most tokens as securities.

While Prometheum is testing its strategy to assume the SEC is right, most of the industry and prominent Republican lawmakers claim it's impossible to run such a crypto business under the existing securities laws.

Prometheum is the first fully registered crypto special-purpose broker dealer under the SEC's rules and is licensed for clearing and settlement.

However, Prometheum hasn't yet disclosed any customers or revenue to prove its critics wrong.

Kaplan said there's been "an immense amount of interest" from potential users and issuers.

"We're trying to be the PayPal of the digital asset industry," said Aaron Kaplan, who shares the CEO duty with his brother.

Prometheum Capital's addition of the tokens from Optimism, an Ethereum-based layer-two blockchain, and The Graph, a decentralized protocol for indexing and querying data from blockchains, was announced alongside the grand opening.

"This is just the beginning," Benjamin Kaplan said of the launch with five eligible tokens. "We're going to have quite a full vending machine."

The company does not yet have a public timeline for launching trading and settlement services.

When asked whether the company has had any clear conversations with the regulator over whether its approach is viable, Kaplan declined to detail interactions except to say Prometheum communicates with the SEC in the normal course of business.

An SEC spokesman declined a request for comment on the agency's view of Prometheum's custody operation.

The business' survival represents one of a handful of crucial industry tests, which would also include the outcome of a number of federal court battles.

In Prometheum's case, if the SEC accepts its business model, that could prove it's possible to run a crypto platform under current laws, as argued by SEC Chair Gary Gensler.

But if the SEC puts a stop to it, it counters the years-old argument from the agency that digital assets businesses need only comply with the laws to satisfy the agency.

Commodity Futures Trading Commission Chairman Rostin Behnam said in congressional testimony this year that a move from the SEC that validates Prometheum's treatment of ETH as a security will throw into question the longstanding position of CFTC-regulated firms that it's a commodity.

"We're not here to fight the battle between regulators," Benjamin Kaplan said. "We're proceeding under the federal securities laws as we believe it's the best framework to protect customers."