Prometheum Inc. has launched its custody services for institutional clients. This is an exciting development in the crypto space. Initially, they started with Ethereum's ether (ETH). They later added Uniswap (UNI) and Arbitrum (ARB) to their offerings. This week, they also announced that they will provide custody for Optimism (OP) and The Graph (GRT).

Co-CEO Aaron Kaplan shared that Prometheum aims to be the PayPal of the crypto world. That's a big ambition!

As the crypto industry grapples with the U.S. Securities and Exchange Commission (SEC) over how most tokens are classified, Prometheum is ready to test its strategy. They believe the SEC's view might be correct.

Now, Prometheum is set to accept institutional clients' holdings of ETH, UNI, ARB, OP, and GRT. They officially opened their custody business after a soft launch. Benjamin Kaplan, the CEO of Prometheum Capital and co-CEO of Prometheum Inc., says they are also gearing up to start trading soon.

What sets Prometheum apart is that it's the first fully registered crypto special-purpose broker-dealer under SEC rules. They have a license for clearing and settlement, which could make them a one-stop shop as they fully operationalize their business. Until recently, they were the only ones in this position, but now tZero Group Inc. has also received a broker-dealer license and plans to launch products next year.

However, many in the industry, including some prominent Republican lawmakers, argue that running a crypto business under current securities laws is challenging. Prometheum hasn't disclosed any customer details or revenue yet to address these concerns.

Kaplan mentioned there’s been a lot of interest from potential users and issuers. He said, “We're trying to be the PayPal of the digital asset industry.” He pointed out that there isn't a compliant infrastructure for the full life cycle of securities products issued on-chain. This is crucial as more people look into asset tokenization.

With the addition of tokens from Optimism, a layer-two blockchain built on Ethereum, and The Graph, a decentralized protocol for indexing blockchain data, they announced their grand opening. “This is just the beginning,” Benjamin Kaplan said about launching with five eligible tokens. “We're going to have quite a full vending machine.”

Currently, the company hasn’t shared a timeline for launching trading and settlement services. When asked about discussions with regulators regarding their business model, Kaplan kept it vague, stating that Prometheum communicates with the SEC as part of their normal business practices.

An SEC spokesperson declined to comment on Prometheum's custody operations. The success of Prometheum’s model is a critical test for the industry. It coincides with several federal court cases. If the SEC supports Prometheum’s approach, it could show that a crypto platform can operate under existing laws, as SEC Chair Gary Gensler has suggested. On the other hand, if the SEC shuts down their operations, it would contradict the agency's long-held view that digital asset businesses must comply with the law.

Commodity Futures Trading Commission Chairman Rostin Behnam noted in congressional testimony this year that if the SEC validates Prometheum's classification of ETH as a security, it could raise questions about the status of CFTC-regulated firms that view ETH as a commodity.

“We're not here to fight the battle between regulators,” Benjamin Kaplan remarked. “We're proceeding under the federal securities laws because we believe it's the best way to protect customers.”