SEC Licenses This First Crypto Company
The SEC provides a first crypto company with a license as an exchange. The New York company Prometheum wants to lead the industry to more consumer protection. So far, however, the plans have large gaps.
SEC Licenses This First Crypto Company
The SEC grants a license to a first crypto company. The announcement comes as the conflict between the crypto industry and the US Securities and Exchange Commission is still smoldering.
A few days ago , Prometheum Ember Capital announced that it had received an official license from FINRA, allowing it to operate as a digital asset exchange.
FINRA is itself regulated by the SEC. The SEC, in turn, delegated to FINRA the issuance of licenses for companies engaged in securities trading.
“This approval allows Prometheum Capital to hold securities of digital assets on behalf of retail and institutional clients.” The company explains in a press release .
The terminology alone continues to indicate regulatory conflicts in the USA. The SEC now mostly treats cryptocurrencies as securities that are subject to strict regulation, rather than as goods or commodities that are given more freedom.
The fact that the SEC makes this assessment at all is increasingly leading to conflicts in US politics. That’s why Democrats and Republicans clashed in Congress. Republicans are now calling for strict SEC oversight. They accuse Democratic head of agency Gary Gensler of abuse of power.
US Securities and Exchange Commission Crypto License Calms Industry Down?
The fact that the SEC issues a license to a crypto company at all recently caused amazement. Is the agency calming down the angry industry, which is increasingly considering fleeing the United States?
There are still some crypto exchanges that are active in the USA. Among them are well-known names such as Coinbase or Kraken. They also have a license issued by the state in which they are headquartered.
However, Prometheum has the first federal license thanks to the approval of FINRA. The company should therefore also appear in strict, crypto-hostile New York, where Prometheum is based. Above all, Prometheum wants to convince with higher consumer protection.
Investors in digital assets in the United States currently hold cryptocurrencies, which are securities, through platforms that do not offer the same level of customer protections that are required of us under federal securities laws.
According to Prometheum’s partisan assessment, there is therefore an enormous risk for customers of other crypto exchanges.
Managing Director Aaron Kaplan is convinced that his company is on the right track to regain lost investor confidence. In November 2022 in particular, the industry suffered a severe blow from the massive infidelity of the crypto exchange FTX.
In fact, Prometheum was only founded because Aaron and co-founder Benjamin Kaplan recognized the lack of consumer protection in the industry as a weakness in 2017 and wanted to improve it.
The company wants to prove that it is possible to operate as a crypto exchange in accordance with the law. Several large companies in the US have denied this in the past.
So far, however, Prometheum has not received permission to settle digital trades, only to hold digital securities. Bitcoin is eliminated because, according to the SEC, it is a commodity. It remains to be seen whether the up-and-coming company’s approach will be able to establish itself at all.
