The conflicting status of ether as a security or commodity was further exacerbated through a series of developments between Friday and Monday. 

A May 20 report from Fortune detailed how Prometheum, the controversial trading platform that made waves last year for its approach towards treating crypto assets as securities, has soft-launched its custody service for ether that does just that.

Prometheum reportedly released the custody product to a few select companies on May 17 and plans to go ahead with the complete rollout this June. 

The firm’s co-CEO Aaron Kaplan antagonized many in the crypto community with his testimony before the United States House Committee last year, when he argued that existing securities laws and regulations applied to several crypto assets, and several “reckless, unlawful platforms” should be regulated by the U.S. Securities and Exchange Commission (SEC).


Kaplan first made these sentiments public in a May 2023 appearance on Unchained, where he said he agreed with Gary Gensler’s stance on the fact that every crypto asset besides bitcoin should be labeled a security.

Prometheum’s product launch had some industry watchers worried that it could be a bad signal for the chances of the SEC approving a spot ether ETF, particularly after several analysts revised their estimates on that outlook to the downside in recent months.

“This is why we have to keep fighting. Gensler probably told Prometheum to launch their ETH custody as a security service week as he builds his list of excuses for not approving the ETH spot ETF,” said Thinking Crypto founder Tony Edward on X.

Those fears were seemingly short-lived after the SEC asked spot ether ETF applicants to update their 19b-4 filings ahead of a major deadline this week. This prompted Bloomberg Intelligence ETF analysts Eric Balchunas and James Seyffart to raise their estimated odds of a spot ether ETF approval to 75% from their previous forecast of 25%.

“hearing chatter this afternoon that SEC could be doing a 180 on this (increasingly political issue), so now everyone scrambling (like us everyone else assumed they’d be denied),” said Balchunas in an X post.

The price of ether surged 20% after news of these increased odds made its way across the crypto community. Bitcoin and other major altcoins also saw more modest rallies following the speculation around the higher likelihood of spot ether ETFs hitting the market in the near future.