Prometheum Gains Final Approval for Fully-Compliant Crypto Trading

• Prometheum Inc. on the Verge of Testing a Fully SEC-Compliant Crypto Platform
• Prometheum's Compliance Journey
• Crypto Platforms and SEC Regulations
• SEC and the Trading of Digital Assets
• Future Plans and Possibilities

Prometheum Inc. on the Verge of Testing a Fully SEC-Compliant Crypto Platform

Prometheum Inc., a pioneer in obtaining special-purpose crypto broker dealer licensing under U.S. Securities and Exchange Commission (SEC) rules, is now gearing up to operate a completly compliant crypto platform as per SEC regulations. This development comes in light of the company's expanded licensing, detailed in a recently released Financial Industry Regulatory Authority (FINRA) document.

Prometheum's Compliance Journey

The co-CEO's letter, Benjamin Kaplan, that announced the expanded licensing, must be resubmitted to FINRA to finalize the company's new status. In its new capacity, Prometheum will clear and settle digital assets securities trades, a service it has not offered previously. The company intends to commence custody of institutional clients' assets in the coming quarter.

Co-CEO Aaron Kaplan anticipates substantial institutional demand for this service. Reflecting on the interest shown in the possibility of SEC approval of a Bitcoin$42,260 -0.64% spot exchange-traded fund, he expects the presence of an SEC-approved firm that is fluent in compliance language will encourage institutions to actively participate in the crypto space.

This recent FINRA approval could prompt renewed debates over Prometheum's status. Prometheum's unique compliance approach has been a point of contention in the crypto sector, particularly as it challenges the industry's long-held view that operating a digital-assets platform within existing regulations is unrealistic.

Crypto Platforms and SEC Regulations

Such disagreements have led to court battles, such as U.S. exchange Coinbase's argument in April that existing SEC registration and disclosure requirements are incompatible with digital assets. The success of Prometheum could potentially invalidate these complaints about operating within the U.S., as it demonstrates a feasible way to comply with SEC regulations.

Prometheum plans to launch its digital asset custody services for asset managers, hedge funds, and other financial institutions in Q1 2024. By Q2, the company intends to introduce trading and clearing services, initially for institutional customers and later for retail investors. Kaplan also envisions Prometheum as a platform for tokenizing traditional securities.

SEC and the Trading of Digital Assets

The SEC's stance on digital assets has not always been clear. SEC Chair Gary Gensler maintains that existing securities laws applicable to investment contracts should also apply to the majority of cryptocurrencies. However, the SEC only recognizes Bitcoin as being outside its securities jurisdiction.

Despite the regulatory ambiguity surrounding other tokens, Prometheum has disclosed some of the securities it could support, including Flow$0.909 -1.61% (FLOW), Protocol Labs' Filecoin$5.91 -2.78% (FIL), The Graph (GRT), Compound (COMP), and the Celo platform's CELO.

Future Plans and Possibilities

Prometheum plans to make further announcements next year. Details about specific tokens that the company plans to support were not provided. Kaplan stated that the company has maintained standard communication with its regulators.

Industry executives argue that Prometheum would only be able to trade securities registered with the SEC, implying that the company might have nothing to trade due to the majority of crypto assets remaining unregistered. However, Prometheum disputes this, arguing that compliance with SEC requirements, such as routine disclosures, falls on the entity backing an asset, not the trading platform.

Now that Prometheum has secured licensing for custody, trading, clearing, and settling, it plans to service the lifecycle of a digital asset all under one roof. If the SEC's recent proposal to demand that registered investment advisors place their clients' crypto assets with qualified custodians is finalized, Prometheum, being a crypto-native firm licensed to take custody of digital assets, could find itself among a select few.

In conclusion, the upcoming months are crucial for Prometheum, as the company's success or failure could reshape the crypto industry's perspective on SEC compliance.

Edited by Jonathan Stoker