Uniswap, Arbitrum Labelled as Securities By This Firm: Why?

Prometheum, U.S.-registered digital asset firm, has stirred controversy by classifying Uniswap’s UNI and Arbitrum’s ARB tokens as securities. This move, which expands the firm’s custodial services to include these tokens along with Ether (ETH), reflects a broader regulatory struggle within the cryptocurrency sector.

On August 21, 2024, Prometheum announced that it will add UNI and ARB to its custody platform, treating them as “digital asset securities.” This decision is set to roll out in the third quarter of the year, providing institutional clients with secure storage options for these tokens.

Prometheum Capital, the firm’s specialized broker-dealer arm, claims to be the only SEC-qualified custodian and broker-dealer for digital asset securities.

This classification aligns with the SEC’s interpretation but diverges from the prevailing industry perspective. Prometheum’s stance on UNI and ARB mirrors its earlier decision to classify Ether as a security—a move that has not been universally accepted.

Arbitrum and Uniswap Tokens Classification Raises Eyebrows

The decision to treat UNI and ARB as securities places Prometheum at odds with many in the cryptocurrency industry. Uniswap Labs, for instance, has vehemently disputed the SEC’s classification of UNI.

The decentralized exchange argues that UNI is not a security and should be treated similarly to Bitcoin (BTC) and ETH, which are seen as commodities by some regulators.

The broader context reveals a heated regulatory debate in the U.S. Many major cryptocurrency firms, including Coinbase and Ripple, are actively challenging the SEC’s approach.

These companies argue that digital assets should be classified as commodities or digital goods rather than securities. This ongoing conflict creates uncertainty about the regulatory future for cryptocurrencies in the United States.

Regulatory Concerns and Future Implications

The regulatory framework for digital assets is becoming more intricate as U.S. regulatory agencies hold differing viewpoints.

For example, the Commodity Futures Trading Commission (CFTC) has classified Ether as a commodity, highlighting the jurisdictional overlap with the SEC. This misalignment between regulatory authorities adds to the complexity faced by cryptocurrency firms.

Prometheum’s decision to classify UNI and ARB as securities underscores its commitment to aligning with the SEC’s regulatory framework. Prometheum is setting itself apart as the sole firm officially recognized as a broker-dealer for crypto assets.

However, this role comes with significant risks. The firm’s conservative stance may place it in conflict with industry trends and potential legislative developments.

Prometheum’s move to include UNI and ARB in its custodial services highlights its adherence to a rigorous compliance strategy. While this choice aligns with the SEC’s vision, it has sparked considerable debate within the cryptocurrency sector.

The outcome of ongoing legal battles and regulatory discussions will likely shape the future landscape for cryptocurrencies in the United States.