On Friday, the New York-based company put its theory to the test by launching its long-planned custody services for Ethereum. The move is notable because Prometheum is doing so in a way that classifies the token as a security under the supervision of the Securities and Exchange Commission. The custody launch appears to validate the position of agency chair Gary Gensler, who has countered the broader crypto industry’s position by saying the existing regulatory regime is adequate and effective.

“It eliminates a lot of the arguments that things can’t be done under existing laws,” said Aaron Kaplan, the co-CEO of Prometheum Inc., the parent company of the entity launching Ether custody. “It marks the first time that…an investment contract digital asset security is being custodied and treated under the securities laws.”

The wager

Founded by the brothers Aaron and Benjamin Kaplan, Prometheum existed in relative obscurity before bursting onto the crypto scene in mid-2023 with the announcement that it had procured a first-of-its-kind broker-dealer license that would allow firms to custody digital asset securities.

While much of the blockchain industry argues that the vast majority of cryptocurrencies should not be treated as securities under the jurisdiction of the SEC, Prometheum made a novel alternate claim. It argued that its special purpose broker-dealer distinction—along with a license for a separate entity to operate an alternative trading platform—would allow it to offer trading for cryptocurrencies under existing SEC regulations.

Prometheum’s wager, along with a contentious appearance by Aaron Kaplan at a House Financial Services Committee hearing on digital assets, drew withering critique from industry leaders, who argued that Prometheum’s approach would not work, and that it would not be able to launch products or find customers.

For months, Prometheum declined to name which crypto assets it would treat as securities and offer on its platforms, until February, when it announced that it would soon make Ethereum available for custody. While the launch does not constitute its full trading offering, custody is a necessary first step to facilitating trading, as customers need to have a venue to hold the assets they buy and sell. By operating both the custodian and the trading system under separate entities with approval from the SEC and the Financial Industry Regulatory Authority (FINRA), an independent industry oversight body, Prometheum claimed it had found a compliant path where competitors like Coinbase had failed.

Again, the announcement was met with vitriol, with crypto advocates fearful that the launch would mean the SEC viewed Ether as a security—a position the agency has not yet made, but has repeatedly telegraphed, and that would have far-reaching consequences for the sector. Those worries were exacerbated when the SEC issued a Wells notice against the Ethereum developer Consensys in late April that seemed to confirm the industry’s fears.

Prometheum’s launch of Ether custody services, however, was delayed beyond its target of March—until Friday. Kaplan told Fortune that Prometheum Inc., the subsidiary of Prometheum that holds the broker-dealer license, soft-launched the product with a small group of companies and planned to fully launch custody services by the first week of June. Full trading, he said, would come within a quarter. He declined to provide further details on the companies included in the pilot.

After months of threatening to upend the crypto industry’s long-held belief about the possibility of trading Ether under SEC guidance, Prometheum’s custody launch represents the first test of the company’s strategy.

“It took a little longer than we anticipated,” said Kaplan. “But we didn’t really have the option of doing it a different way.”