- SEC’s approval of Prometheum’s license raises concerns in the crypto community.
- Lawmakers question the timing of licenses amidst ongoing regulations.
- Prometheum’s co-CEO advocates for SEC’s regulatory framework.
In a recent report by Eleanor Terrett, a Fox Business reporter, Patrick T. McHenry, the Chairman of the United States House Financial Services Committee, has demanded that Gary Gensler, the chief of the United States Securities and Exchange Commission (SEC), hand over documents related to Prometheum’s licensing. This move comes as the Committee considers addressing gaps in regulating digital assets.
?NEW: Chairman @PatrickMcHenry led Republicans on the Financial Services Committee in letters to @FINRA and @SECGov‘s @GaryGensler regarding the approval of @PrometheumInc as the only Special Purpose Broker-Dealer for digital assets. https://t.co/DIZFw2XeZh
— Eleanor Terrett (@EleanorTerrett) August 15, 2023
Prometheum, a crypto-related firm, was granted a special broker license in May by the Financial Industry Regulatory Authority (FINRA) under the jurisdiction of the SEC. This license allows Prometheum to provide custody services for digital asset securities. However, this approval has sparked concerns within the cryptocurrency ecosystem and amongst lawmakers.
Notably, the SEC approved Prometheum’s license shortly after taking enforcement actions against major cryptocurrency exchanges Binance and Coinbase. This raised eyebrows in the crypto community, as Prometheum is a less-recognized crypto firm and does not offer trading in top crypto assets like Bitcoin (BTC) and Ethereum (ETH).
Republican lawmakers have also raised suspicions about the timing of the license, questioning why it was granted while they were still working on regulations for the crypto industry. The approval came shortly after Republicans in the U.S. Congress introduced a draft Bill to reclassify digital tokens from securities to commodities.
During a U.S. House Financial Services Committee hearing in mid-June, Prometheum’s CEO Aaron Kaplan was allowed to testify as a witness. This action further fueled concerns, with Representative Mike Flood calling the approval from FINRA and SEC “nonsense.”
Prometheum’s co-CEO has stated that the crypto industry’s way forward is through the current regulatory framework designed by the SEC. However, critics have pointed out that Kaplan’s testimony was influenced by Democratic members of Congress or the markets regulator.