Prometheum Capital and others have been permitted to deal in cryptocurrency securities, despite the industry’s battle with the American regulator over “impossible” requirements.
As a watchdog supported by the Securities and Exchange Commission (SEC) covertly grants substantial licenses for businesses attempting to adhere to the securities rules, the foundations of a completely compliant U.S. crypto infrastructure may be emerging on the periphery of the sector.
Prometheum Ember Capital LLC was named the first broker-dealer with custody rights for digital asset securities by the Financial Industry Regulatory Authority (FINRA), an industry-funded regulatory body established by the SEC, on Tuesday.
The OTC Markets club was also recently given authorization by FINRA to join the select club of firms permitted to legally undertake to trade in bitcoin securities.
Prometheum Capital, a cryptocurrency company that was specifically created to comply with SEC laws on the presumption that practically all tokens are securities under U.S. law, received broker-dealer clearance, which may be considered a significant milestone.
The founder and co-CEO of parent company Prometheum Inc., securities attorney Aaron Kaplan, said the company would show that industry complaints about the lack of a road to U.S. compliance are incorrect.
In an interview, Kaplan stated that “there is an opportunity ahead for crypto in the United States. “Those who bemoaned a lack of regulatory clarity “were trying to put a square peg into a circle hole,” he added.
A significant percentage of the cryptocurrency sector has accused the SEC of imposing impractical requirements on businesses that register exchanges, brokerages, and the assets themselves by long-standing securities rules. Gary Gensler, chair of the SEC, has a habit of urging cryptocurrency companies to “come in and register” or risk having their securities violations investigated.
For instance, the American crypto platform Coinbase (COIN) has been informed that an enforcement action is imminent, and the business has challenged the agency in court over its reluctance to offer regulations or advice designed specifically for the cryptocurrency industry.
Crypto lobbyists have appealed to Congress to finally enact legislation creating a specific framework for the American digital asset markets. However, despite the several proposals that have been presented, lawmakers have yet to make significant headway on them, and the situation is expected to remain unsettled this year.
In the meantime, Prometheum Capital has received approval as both an alternative trading system (ATS) for digital asset securities as well as a “special purpose broker-dealer” that, starting on May 17, can take custody of customers’ crypto assets. According to Kaplan, the firm’s platform is scheduled to go live in the third quarter.
