First US Broker-Dealer License for Cryptocurrency Securities, but Bitcoin Not Included

First US Broker-Dealer License for Cryptocurrency Securities, but Bitcoin Not Included

New York-based Prometheum Ember Capital has been granted the first special purpose broker-dealer license by the US Securities and Exchange Commission, enabling it to handle securities backed by digital assets, although bitcoin cannot be supported.

Reports by regulations established by the United States Securities and Exchange Commission (SEC), the 1st special purpose broker-dealer license has been granted, allowing a digital currency company to handle securities backed by digital assets. There is, on the other hand, a catch: Bitcoin (BTC) cannot be supported.

The clearance, reports by Prometheum Ember Financial resources, a New York-based company created in 2021, enables it to act as a certified custodian and safekeep digital investment assets on behalf of individual and institutional clients. The company sees it as a whole lot of step in establishing the judicial system and permits necessary to sooner or  thereafter allow its parent company, Prometheum Inc., to offer digital currency trading to customers.

Conflicts with the government

We have previously informed that, during the last part of 2022 and 1st part of in the year, the United States Government has been engaged in a series of actions against digital currency corporations and, through its agencies CFTC and the SEC, has argued that cryptocurrency crypto tokens are securities and outrightly sued some exchanges. Numerous critics have spoken against these actions, claiming that the United States Government is driving cryptocurrency innovation out of the country. Nonetheless, we have seen corporations leave the  United States for greener pastures in Europe (France) and Asia (Hong Kong).

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The latest information of Prometheum Ember Capital’s license approval may be seen as indicating that it is possible to register as a digital currency business with United States regulatory authorities. The bulk of digital assets, reports by SEC Chair Gary Gensler, are securities, and corporations that sell them to United States customers must register with the SEC. Nonetheless, numerous cryptocurrency corporations have disputed that claim, arguing that Congress should take action to enact new legislation because the present regulations are ineffective.

Prometheum was established in 2017 by a group of Wall Street attorneys and it describes itself as a “blockchain-focused company building an end-to-end ecological system for the trading, custody, and settlement of digital investment securities.”


Reports by co-chief executive officer of Prometheum Inc. Aaron Kaplan,

the company’s entire thesis is the fact that digital assets are securities, and the best way to regulate them is under the federal securities laws.

Under previous Chair Jay Clayton, the SEC announced a policy statement in 2020 that outlined a process for enterprises involved in digital currency to become registered as special purpose broker dealers. Such applications are reviewed and approved by FINRA, the Financial Industry Regulatory Authority. Corporations must fulfill regulations and can only own digital investment securities, not traditional securities or cryptocurrency assets that aren’t securities, like Bitcoin, to be able to receive the license.

Prometheum rejected to provide a list of the crypto tokens it will support, stating that decision-making over which assets qualify as digital investment securities would be made internally.

Kaplan said:

We share the same opinion as Chairman Gensler and hope in order  to facilitate a lot of those assets. Chairman Gensler has stated that the vast bulk of digital assets, essentially everything except for Bitcoin, is a security.

In its press release, the company stated:

With the approval of the SPBD, Prometheum Financial resources will serve as a qualified custodian. Standing on the other side  to cryptocurrency exchanges and other platforms of trading in the United States that operate only under state licenses, Prometheum Financial resources is subject to the Securities and Exchange Act (“SEA”) 15c3-3 Customer Protection Rule as required under federal securities laws.

Limited Route

The company’s selection of items is as of now constrained. The company cannot combine its broker-dealer license with an alternative trading systems license to enable consumers to trade digital assets because it has not is still received clearance for clearing and settling under that license.

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Reports by a company representative, Prometheum Ember anticipates getting more approval to clear and settle transactions soon. In addition, it has a company with an alternative trading system license. In the long run, clients will be able to trade digital currency through Prometheum’s subsidiaries.

Regardless of the restrictions on what a business may now do with it, some legal specialists assert that the preliminary approval of this license indicates a whole lot of milestone.

Gary DeWaal, senior counsel at Katten and a previous United States Commodity Futures Trading Commission enforcement attorney, stated that the notice “now opens the door for an SEC registered entity to have custody over some digital assets securities in this space.” Which shows that a path exists.


Obtaining the special broker license, on the other hand, can potentially be challenging for already- established cryptocurrency exchanges.

Reports by Russell Sacks, partner at King & Spalding, “the conditions in the December 2020 release are quite complex and rigid and create a very complex web of policies and procedures that must be put in place to be able to meet the requirements.” “The barriers to establishing special purpose broker dealers that are designed to deal with securities relating to digital assets are still very much present.”

DeWaal claimed that defining what constitutes a digital investment security and what does not remain the most important challenge in achieving regulatory clarity. The preliminary license acceptance is “not the be-all, end-all solution,” he declared.

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