The crypto startup Prometheum has recently become the Securities and Exchange Commission’s (SEC) poster child for compliance, gaining attention as a market ecosystem bridging traditional finance to crypto. The firm distinguishing itself as the first crypto-centric broker-dealer to register with the SEC and being a member of the Financial Industry Regulatory Authority (FINRA).
Prometheum’s founder and co-CEO, Aaron Kaplan, testified before the House Financial Services Committee, emphasizing that a clear regulatory pathway exists for crypto firms. He also criticized new legislation targeting crypto, arguing that it’s not in the best interest of investors and that those advocating for new laws are unwilling to comply with existing securities laws. However, these remarks prompted backlash from digital asset industry members who questioned the preferential treatment the relatively unknown firm appeared to receive from regulators due to its alignment with the SEC’s stance.
Despite the controversy, Kaplan maintains that the firm’s regulatory status is a result of hard work and determination. He stated, “Prometheum has been working for years to build a compliant, regulated trading platform for digital asset securities to provide investors the protections afforded under the federal securities laws,” and that this represented an “important step forward” for the crypto industry.
As the industry continues to dissect Prometheum, concerns have been raised over the firm’s limited offerings as a result of not yet being able to trade digital assets. For example, Rodrigo Seira, special counsel at crypto-focused investment firm Paradigm, argued that Prometheum’s alternative trading system is like a bicycle without wheels. Critics also raised suspicions around the company’s connection to two China-affiliated firms, Wanxiang and Network 1 Financial Securities, as well as the firm’s lack of a product launch since its inception in 2017.
However, Prometheum’s journey may help others in the crypto industry understand the regulatory process and demystify the SEC’s perspective on digital asset compliance. As the Blockchain Association seeks further information on the company through the Freedom of Information Act, more details may surface to dispel or confirm widespread concerns. It remains to be seen if Prometheum’s story will embolden or deter future crypto startups seeking regulatory compliance.
Source: Decrypt
