Are you aware of the recent controversy surrounding the ‘Prometheum broker approval’ by the U.S. Securities and Exchange Commission (SEC)? A group of Republicans in the House Financial Services Committee (HFSC) has raised serious concerns about the SEC’s approval of Prometheum, a crypto broker that is relatively unknown. They argue that the timing of this approval is suspicious, especially considering the current state of cryptocurrency regulation in the United States.
The Timing of the Approval
According to the HFSC, the timing of the ‘Prometheum broker approval’ suggests that it was intended to show that no legislative measures are required because a suitable regulatory framework for digital asset securities custody already exists. This viewpoint was communicated in a letter sent to the SEC last week.
It is worth noting that the Financial Industry Regulatory Authority (FINRA) approved Prometheum as the first-ever Special Purpose Broker-Dealer (SPBD) for digital assets on May 17. This happened more than two years after the regulatory regime was first established in December 2020. During this period, no other cryptocurrency exchange managed to get approval under this framework.
Questionable Claims
SEC Chairman Gary Gensler has often stated that the current securities laws are clear and that crypto firms that do not comply are choosing not to follow the law. He has cited Prometheum’s approval as proof that there is a clear path for existing companies to comply. However, the HFSC has questioned these claims, pointing out that Prometheum has yet to serve a single customer and has refused to disclose the digital asset securities it would support on its platform.
National Security Concerns
The HFSC has also expressed national security concerns over the ‘Prometheum broker approval’. They pointed out that Prometheum is 20% owned by Wanxian, a company with strong connections to the Chinese Communist Party (CCP). The HFSC has requested that the SEC and FINRA provide all documents and communications related to Prometheum’s approval by August 22.
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