Republican Lawmakers Question SEC’s Approval of Prometheum as a Crypto Broker-Dealer
Republican lawmakers on the U.S. congressional committee overseeing the SEC have intensified their scrutiny of the agency’s crypto approval process. They have sent a letter to SEC Chair Gary Gensler, demanding an explanation for Prometheum’s approval as a crypto broker-dealer. The lawmakers are concerned about Prometheum’s status as a special purpose broker-dealer (SPBD) for “crypto securities.”
- The SPBD framework, introduced by the SEC in December 2020, enables custody and transactions involving digital asset securities.
- Prometheum Ember Capital, a subsidiary of Prometheum, was approved as the first and only SPBD under the new regime.
- Lawmakers question the timing of the approval, which coincided with a joint hearing on crypto assets market regulation.
- Prometheum claims to offer a comprehensive solution for regulated crypto asset offerings but has not served a single customer yet.
- Concerns also arise about Prometheum’s eligibility criteria and its undisclosed digital asset securities.
Prometheum’s Chinese Connection Raises National Security Concerns
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- Lawmakers express concerns about Prometheum’s limited operational capabilities, including its inability to perform clearing or settlement services.
- Questions arise about the potential involvement of a Chinese entity, Shanghai Wanxiang Blockchain Inc., in Prometheum’s early-stage technology development.
- A representative of the Chinese entity holds a directorial position at Prometheum.
Hot Take: The scrutiny of Prometheum’s approval raises questions about the SEC’s crypto approval process and the potential impact on digital asset regulation.
