for digital asset securities across the U . S .
And in May 2023 , a separate Prometheum affiliate — Prometheum Ember Capital — became the first crypto firm to receive a license from FINRA to operate as a special-purpose broker-dealer , permitting it to serve as a qualified custodian with respect to digital assets . The license was expanded in December 2023 , allowing Prometheum to clear and settle digital asset trades .
According to Prometheum co-CEO Aaron Kaplan , Prometheum now has a " clear path " to operate within existing federal securities laws , and it expects to launch its custody platform in the first quarter of 2024 .
Along with announcing its intention to play within the rules , Prometheum has also sought to curry favor with the SEC through its public statements . For example , during a House Financial Services Committee hearing last year ,[ 1 ] Kaplan explicitly defended the SEC ' s approach , opining that existing securities rules are sufficient to govern cryptocurrencies and criticizing his competitors as behaving recklessly .
And the SEC has returned the fawning praise , using Prometheum ' s example to squelch the complaints of the crypto companies — and many U . S . representatives and senators — that special rules especially tailored to cryptocurrencies are needed . Indeed , when the SEC denied Coinbase ' s petition for rulemaking in December , SEC Chair Gary Gensler specifically pointed [ 2 ] to Prometheum as an example , demonstrating that broker-dealers can engage in cryptocurrency transactions under the existing securities laws .
But Will It Work ?
Prometheum ' s " if you can ' t beat them , join them " strategy has earned it the enmity of its fellow crypto firms , which believe Prometheum ' s strategy is unworkable and serves only to support the SEC ' s inflexibility .
And there is something to their arguments . Despite Kaplan ' s optimistic view that he has a clear path to clear and settle digital asset trades in compliance with the federal securities laws in the near future , Prometheum ' s naysayers rightfully identify major obstacles .
First off , as an alternative trading system , Prometheum would only be able to match orders for registered securities . Even if the SEC and Prometheum are correct in characterizing virtually all cryptocurrencies as securities , it would be up to the issuer — not Prometheum — to register them . But few if any issuers have announced plans to register their tokens with the SEC , nor are they likely to do so given the industry ' s unanimous refusal to classify tokens as securities .
Second , Prometheum has not yet explained how it , or the token issuer , could make the disclosures required by the SEC under existing securities laws . For example , extensive corporate governance and financial disclosures concerning the issuer are impossible to make — or , at least , wholly beside the point — when dealing with tokens governed exclusively by computer code . And whether Prometheum could comply with federal anti-money laundering laws while trading in decentralized digital currencies is an open question .
Finally , allegations that Prometheum has improper ties to the Chinese Communist Party — strongly denied by Prometheum — continue to dog the company and may ultimately result in congressional or regulatory intervention .