In a move that is sure to cause tremors in the cryptocurrency space, Prometheum Ember Capital was given permission by the Financial Industry Regulatory Authority to provide clearing and settlement services.
Prometheum, a lesser-known provider of digital assets, was grantedb to enable the clearing and settlement of digital asset securities through its special purpose broker dealer license, which it acquired from the Securities and Exchange Commission this past year.
According to Aaron Kaplan, co-chief executive officer of Prometheum, “we really feel that this transition of crypto to federally-regulated ecosystems is a major step forward for the industry as we still need a responsible way for the American public to participate in the digital asset space,” while speaking with The CoinBrit.
By the first quarter of the upcoming year, Prometheum hopes to start providing custodial services to institutional clients, such as asset management companies and hedge funds. Soon after, institutional and retail trading will begin, according to Kaplan.
A wrestling match
Prometheum’s actions coincide with the SEC’s repeated warnings to cryptocurrency exchanges that they must register with the organization. It has accused Coinbase, Binance, and Kraken of acting as an unregistered exchange, broker, dealer, and clearinghouse during the course of the previous year. Crypto companies, meanwhile, have maintained that registering with the government is not feasible.
Prometheum has come under fire from the sector as a whole, with investigations from Republican politicians and the Blockchain Association. According to the Blockchain Association, the company and the SEC struck a “sweetheart deal” in July.
“We are concerned that the Commission granted Prometheum a ‘sweetheart’ deal in exchange for support of the Commission’s policy goals, or that Prometheum is leveraging personal connections with the Commission to gain an unfair advantage in the market,” according to a request for an investigation.
In August, when looking over records pertaining to a license that Prometheum had been granted, House Financial Services Committee Chair Patrick McHenry, R-N.C., also requested that the SEC provide information.
Critics of the SEC, including some Republican senators, say the timing of it all “raises serious questions” as they draft legislation to regulate cryptocurrencies.
Maintain a downward gaze.
In response to a question on Thursday, Kaplan stated that cooperating with the law rather than fighting it is beneficial to those who assert that it is impossible to register with the SEC.
“By keeping your head down and working within the regulation and trying to work within the law as opposed to change the law, one can achieve success when properly registering under the securities law as evidenced by first the approval for the special purpose broker dealer and now the approval to clear and settle.”