There has long been a lot of confusion about the classification of Ethereum (ETH). Is ETH a security or a commodity? A new development could be the deciding factor here. This issue represents a major obstacle for institutional investors to invest in ETH. Institutions also have no easy way to expose themselves to ETH. This is in contrast to Bitcoin (BTC), where spot ETFs launched last month.
Prometheum
The US Securities and Exchange Commission (SEC) is the primary securities regulator in the United States and is therefore responsible for classifying Ethereum. To date, the SEC has not provided any clarity on this issue. However, there is now a new development that could force the SEC to take action.
Crypto company Prometheum announced plans to provide management services for Ethereum on Wednesday. While the SEC remains silent, Prometheum believes Ethereum is a security.
In 2021, Prometheum received approval to operate an alternative trading platform similar to an exchange. Last year, the company received approval from the Financial Industry Regulatory Authority (FINRA) to act as a broker for crypto asset securities. FINRA operates independently but works closely with the SEC.
Huge step towards institutional acceptance of ETH
In other words, Prometheum has legal permission to trade crypto assets. As mentioned earlier, the company announced plans to provide management services for Ethereum. This service will be launched next month. This makes Prometheum the first-ever crypto exchange where institutional investors can invest in crypto assets, including ETH, in a completely legal manner.
The development essentially classifies Ethereum as a security. Because of FINRA’s approval of the plans, there is little the SEC can do about it. Prometheum does not require additional approval from the SEC for this.
Prometheum is on track to offer institutional investors the first opportunity to legally invest in Ethereum this spring. Time will tell how this will play out and whether the SEC has some tricks up its sleeve to put an end to these plans remains to be seen. However, it is a big step towards crypto trading in compliance with existing securities laws in the United States.