Ether’s Prometheum Test | Nasdaq

As crypto regulators have, for years, hemmed and hawed over essential legal questions like “is ether a security?,” the industry has often complained about a lack of legal clarity.

It has been impossible, many have said, to comply with the law because it’s not clear exactly what the law says, or rather how regulators will interpret that law related to something as novel as an internet-era digital asset.

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We still don’t know, for instance, whether ether is a security or a commodity, though the SEC has breadcrumbed that it’s probably the latter and that the leading securities regulator is not, therefore, responsible for regulating the second most important crypto asset after bitcoin.

But is it?

This week, Prometheum, a weird anomaly in being the “only U.S.-registered crypto securities platform,” announced that it would begin to custody ETH as its first digital asset.

The news is important because it tests two key open questions in crypto — one, whether it’s possible to comply with the SEC when transacting leading cryptocurrencies, and two, who, if anyone, is finally going to adjudicate on ETH classification so we can all go about building the next generation crypto industry.

My colleague, regulation deputy managing editor Jesse Hamilton, summed up the stakes in a masterful dissection of the (very complicated) matter yesterday:

“At that point, [Prometheum] will either be proving the claims of its executives that crypto can be handled in the U.S. in a way that appeases the securities watchdog, or proving the naysayers who argue that it’s impossible to meet the SEC’s expectations,” Hamilton writes.

See also: DeFi Shouldn’t Have to Worry About the SEC’s Expanded Broker Rule | Opinion

“The stakes aren’t just high for Prometheum and the rest of the industry, but also for the government agency that has claimed for years that there’s a proper way for crypto firms to ‘come in and register’ to do business in the U.S.; Prometheum came in and registered but what happens next is unclear. And while it tests these murky waters, it may also help establish whether the SEC intends to view ETH as a…