Crypto has arrived in the brokerage account but what does it mean for advisors?

Prometheum Capital, the SEC-registered crypto asset clearing broker-dealer, has cleared and settled what it says is the first purchase of Ethereum directly within a traditional US brokerage account.

As this was not through an ETF or ETP wrapper the firm says this marks a foundational shift in how broker-dealers and registered investment advisors can offer crypto assets to clients.

Speaking with InvestmentNews, Aaron Kaplan, founder and co-CEO of Prometheum, said the significance of the moment lies in where the asset now sits and what rules govern it when it gets there.

"What's significant about this milestone is for the first time, a client can hold a crypto asset inside a brokerage account governed by federal securities law, with the legal segregation of assets, customer protection rules, and compliance infrastructure that advisors and their clients already rely on for every other holding in their portfolio," Kaplan said.

That distinction has practical consequences for broker-dealers who have spent years watching clients take crypto allocations elsewhere. "Instead of losing clients and revenue to crypto trading platforms, they can compete in crypto assets and win back lost revenue while future-proofing their business to support securities as they move on-chain," he said.

Until now, the few brokerages that offered spot crypto trading did so outside the customer protection standards their businesses are built on. "The few brokerages that do offer spot crypto trading do so through state licensed or money transmitter licensed entities that sit outside that framework, creating real operational and compliance challenges," Kaplan said. "ETFs and ETPs gave investors exposure to crypto through a wrapper, but not the underlying asset."

The result, he argues, changes the substance of the client conversation itself. "Broker-dealers and RIAs can now offer clients direct ownership of ETH within the account structures, changing the client conversation from 'I can get you crypto exposure' to 'I can offer you direct ownership of the asset, in your account, through our existing relationship.'"

This month’s milestone came alongside the launch of Prometheum Capital's Digital Brokerage Solutions, a correspondent clearing, custody, and trading platform that enables broker-dealers to offer clients access to crypto assets, digitally-native securities, and tokenized securities through existing brokerage account structures. Inaugural clients include Arete Wealth Management, Network 1 Financial Securities, and a clearing broker-dealer that entered an omnibus clearing agreement.

ETFs versus direct ownership

For advisors weighing whether direct token ownership adds anything beyond what a crypto ETF already provides, Kaplan drew a clear line between the two instruments.

"Owning a crypto ETF means owning shares of a fund, with no direct claim on the underlying asset, ongoing expense ratios, fund-imposed constraints, and exposure limited to traditional market hours on an asset that trades continuously around the clock," he said. "Direct token ownership gives advisors and clients more precise control over exposure, cost, and the timing of taxable events. Both instruments have their place under Reg BI, and the right answer depends on the client. What's changed is that advisors now have the choice."

The regulatory distinction between the two approaches is also material. A crypto asset held in a brokerage account is subject to Rule 15c3-3, FINRA oversight, best execution obligations, and net capital requirements;  the full architecture of federal securities law.

"The money transmitter licenses and state charters under which most crypto platforms operate were not designed for securities custody and carry materially different investor protection standards," Kaplan said. "For broker-dealers and RIAs regulated by the SEC, that distinction matters."

Removing the operational barrier

For firms that have considered crypto asset adoption and pulled back because of the compliance and infrastructure lift involved, Kaplan said the correspondent clearing model is designed to make digital asset access a business decision rather than a technology project.

"Firms should not have to build new technology stacks, overhaul compliance frameworks, or run parallel operating systems to offer clients crypto assets," he said. "What Prometheum Capital's correspondent clearing platform does is remove those barriers by bringing crypto assets into the infrastructure broker-dealers already use, subject to the same oversight workflows already in place."

He was candid about the limits of where the industry stands legislatively.

"SEC guidance is not the same as legislative codification, and the CLARITY Act remains an important milestone for the entire industry. Broker-dealers will not adopt at institutional scale until that clarity exists. What we have built is infrastructure designed to operate at the highest current regulatory standard, which means it is positioned to function in whatever legal environment that legislation produces."

Solving the tokenization distribution problem

Tokenized securities have attracted significant capital and attention in recent years, but Kaplan said the industry has been missing a critical piece: a distribution pathway that actually reaches investors.

"The tokenization story to date has been primarily an issuance story," he said, noting that roughly $30 billion of tokenized and digitally-native securities have been issued on blockchain rails. "What has been largely absent is a compliant, scalable distribution pathway to reach the advisors and broker-dealers who actually manage client assets. You can issue a tokenized fund, but if it cannot be distributed through the brokerage relationships investors already have, you have a product with no mainstream market."

Opening the broker-dealer channel, he argued, changes the economics of tokenization entirely because "…issuers can now build products knowing the distribution pathway exists."

For advisors evaluating what on-chain securities might actually offer their clients, Kaplan pointed to settlement efficiency, capital efficiency, and automation.

"On-chain securities can settle faster than traditional securities, reducing counterparty risk and freeing capital currently held against open settlement windows," he said. "Tokenized money market funds can pay yield continuously rather than daily, giving investors more precise capital deployment and eliminating the drag of idle cash between settlement cycles."

Due diligence and risk

On the question of what advisors should work through before recommending direct crypto ownership or tokenized securities, Kaplan said the starting point is whether the current solution allows firms to actually meet their regulatory obligations.

"The first question any advisor should ask is whether their current solution allows them to meet their Reg BI and fiduciary obligations, and for the vast majority, the honest answer has been no," he said. "Rule 15c3-3, the Customer Protection Rule, legally mandates segregation of client assets at a federally-licensed broker-dealer, and holding client crypto assets outside that framework is a material risk advisors have been accepting on behalf of their clients without a better alternative."

He also flagged the regulatory distinctions between asset types as something advisors need to understand. "Not all crypto assets are treated the same way under securities laws, especially between what is classically referred to as 'cryptocurrency' and the emergence of 'digital securities.' This distinction matters for custody, reporting requirements, and investor protections."

Five-year horizon

Looking ahead, Kaplan mapped out a timeline that mirrors the adoption curves advisors have seen before with other new asset classes.

"The transition from electronic to digital markets is well underway," he said. "The infrastructure layer is being built now. Regulatory clarity has improved significantly. Product issuance on blockchain rails is accelerating. And as of today, the broker-dealer distribution channel is open."

He expects the next several years to be defined more by infrastructure-building and education than by headline volume numbers: "The firms engaging now will have a significant competency advantage when client demand scales. We have seen that pattern before with ETFs, alternatives, and separately managed accounts."

Within four to five years, assuming legislative codification of crypto asset market structure, Kaplan said he expects tokenized and digitally-native instruments to become a standard component of institutional and high-net-worth portfolios, particularly in fixed income, private markets, and structured products.

"The firms building their crypto asset infrastructure today will be the ones positioned to lead in digital markets as this trend accelerates,” he concluded.