Prometheum adds 'digital asset securities' UNI and ARB to its custodial ranks

Digital asset firm Prometheum's custodial arm said it plans to add two new "digital asset securities" to its ranks, Uniswap (UNI) and Arbitrum (ARB), soon after soft launching its ether custody services.

That means institutional and corporate clients will be able to custody ether, UNI and ARB through Prometheum Capital, according to a statement released by the firm on Wednesday. CoinDesk earlier reported the news.

Prometheum Capital also said it plans to launch custodial services to institutional investors by the third quarter of this year.

"Prometheum Capital will continue to expand its digital asset offerings for custody, and in the future trading, to support digital assets including debt, equities, ETFs, mutual funds, options, money market funds, and other investment contract products that are issued and transferred on a blockchain," the firm said.

Prometheum has been heavily scrutinized by the digital asset industry, as many crypto firms say it is not possible to register with the U.S. Securities and Exchange Commission. However, Prometheum received a special purpose broker-dealer license last year from the SEC, marking the first time a firm has gotten such a license to trade and custody digital assets. Later, the Financial Industry Regulatory Authority (FINRA)  allowed the firm to provide crypto clearing and settlement services through that license.

Prometheum has faced the ire of the industry, with probes coming from the Blockchain Association and Republican lawmakers. The Blockchain Association alleged the firm had a "sweetheart deal" with the SEC last year. Prometheum has said it is possible to properly register under the securities laws.

There has been some misalignment on whether some cryptocurrencies are securities or commodities. SEC Chair Gary Gensler has repeatedly called on crypto firms to register with the agency and has said most cryptocurrencies are securities. Meanwhile, Commodity Futures Trading Commission Chair Rostin Behnam has said ether is a commodity.

It is not clear how the SEC classifies ARB and UNI. Uniswap Labs said it received a warning from the SEC that it planned to bring charges against the decentralized exchange.

In the press release, Prometheum alluded to changes in the regulatory landscape.

"Regulatory changes may impact digital asset securities. Current and future legislation, SEC and CFTC rulemaking, and other regulatory and legal developments may impact the manner in which certain digital assets securities ProCap custodies are classified," the firm said.

"To the extent that any of the digital asset securities we are currently custodying are not deemed to be securities in the future we may not be permitted to continue to custody said securities," Prometheum added.

When asked what conversations with regulators, including the SEC, have been like, Prometheum Capital CEO Benjamin Kaplan said the firm engages with regulators "in the normal course of business."

"We follow stringent internal procedures to ensure compliance with regulatory requirements, particularly when adding new assets like UNI and ARB to our custody platform," Kaplan said in an email. 

Update: Aug. 21, 6:15 p.m. UTC to include comments from Kaplan