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Lawmakers Grill SEC and FINRA on Granting SPBD License to Prometheum

2 mins
Updated by Kyle Baird
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In Brief

  • The House Financial Services Committee questions SEC and FINRA's decision to grant Prometheum Ember Capital LLC an SPBD license.
  • Concerns raised about security and Prometheum's reported ties to the Chinese Communist Party, posing a potential national security threat.
  • Doubts about Prometheum's transparency, as it refuses to publicize the digital asset securities it would support on its platform.
  • promo

United States lawmakers are questioning the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) over why Prometheum has been granted a Special-Purpose Broker-Dealer (SPBD) license.

House Financial Services Committee Republicans questioned FINRA’s CEO Robert Cook, and the SEC’s Chair, Gary Gensler, on Prometheum’s credibility. The letter states,

“While Prometheum claims it is the silver bullet for regulated digital asset offerings, it has not yet served a single customer.”

Lawmakers Raise Concerns About Intent and Security

The public statement on Aug. 15 reveals that Patrick McHenry, the Chairman of the House Financial Services Committee, joined forces with 22 other representatives. Letters to the SEC and FINRA question the rationale behind Prometheum’s authorization as an SPBD.

Approval as an SPBD grants the ability to custody of digital securities. Upon obtaining FINRA authorization, firms gain permission to buy, sell and store digital asset securities.

The Committee question why only Prometheum has received approval as an SPBD, despite having yet to serve any customers. All the while, other crypto firms with a customer base are yet to receive approval.

To learn more about crypto brokers, read BeInCrypto’s guide: 4 Best Crypto Brokers for Buying and Selling Bitcoin in 2023

Additionally, they allege the firm poses a threat to national security.

“The lawmakers are demanding transparency regarding the approval process for Prometheum and raising questions about the risks to national security posed by Prometheum’s reported ties to the Chinese Communist Party.”

Prometheum Approval Sparks Industry Controversies

The committee further probed Prometheum’s transparency regarding its offerings. It challenged Prometheum’s decision to refuse “to make public the digital asset securities” that it will support on the platform.

On June 13, Prometheum co-founder Aaron Kaplan addressed a United States House Committee to discuss the regulations of cryptocurrencies.  Kaplan expressed support for the SEC’s use of traditional securities laws in its crypto approach.

Matt Walsh, General Partner at Castle Island Ventures, found that amid the SEC preparing to take legal action against Binance and Coinbase, Prometheum effectively secured SPBD approval on May 17. He noted:

“Then Prometheum’s CEO somehow gets a seat in front of Congress yesterday and starts reading off pre-written notes clearly coordinating narratives with Democratic members of Congress (or the SEC).”

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Ciaran Lyons
Ciaran is a cryptocurrency journalist based in Sydney, Australia. He particularly enjoys writing about CBDC developments and the practical implementations of cryptocurrency in real-world scenarios. He has also appeared across major television networks in Australia including Channel Ten, Channel Nine and SBS TV. Prior to his foray into cryptocurrency, Ciaran worked as a presenter on national radio station Triple J.