Republican Lawmakers Seek Answer from Gary Gensler over Prometheum's SEC Approval

Republican Lawmakers Seek Answer from Gary Gensler over Prometheum’s SEC Approval

| Updated
by Bhushan Akolkar · 2 min read
Republican Lawmakers Seek Answer from Gary Gensler over Prometheum’s SEC Approval
Photo: OversightandReform / Flickr

Republican lawmakers have questioned whether the US SEC has assured enough security measures before granting Prometheum Inc. the license to operate as crypto broker.

Republican lawmakers at the US Congressional Committee overseeing the Securities and Exchange Commission (SEC) are demanding an answer from SEC chair Gary Gensler over how Prometheum Inc secured a unique approval to operate as a crypto broker-dealer.

Led by Chair Patrick McHenry (R-N.C.), a group of 23 House Financial Services Committee lawmakers raised questions about how the recently revealed company managed to secure SEC registration as a special-purpose broker-dealer for digital assets. They also sought clarification on the factors that led to this decision and the timing of its conclusion, considering other applicants in the process.

Additionally, the lawmakers also sent a letter to the head of the Financial Industry Regulatory Authority (FINRA). It’s an industry-funded group that enforces securities standards under the SEC’s watch. The letter noted:

“The timing of the approval raises concerns that it was aimed at demonstrating that legislation is not needed because there is a workable regulatory framework for the custody of digital asset securities.”

SEC’s Special Treatment to Prometheum?

The letters ask important questions about whether the SEC chose Prometheum as a prime example to support Gensler’s view that new laws aren’t necessary for regulating crypto in the US. This happened just as McHenry’s committee was preparing to send digital assets legislation to the House floor.

However, Prometheum’s leaders have said they’ve been following the registration process like any other company. Co-CEO Aaron Kaplan believes his company will show how to create a crypto platform that follows the rules properly. In a statement on Tuesday, August 15, the company said:

“Prometheum purpose-built its technology with the goal to develop a market infrastructure for digital asset securities that is compliant with the federal securities laws. This technology will serve as a building block for a compliant and orderly digital asset securities marketplace that protects investors and serves their best interests.”

Lawmakers are also joining others in asking for more details about Prometheum’s sudden appearance in Washington. The company hasn’t started trading yet. Both Republicans and Democrats in the Senate and House have raised concerns about this, and Ritchie Torres, a Democrat on McHenry’s committee, has asked for the SEC to be investigated.

Market News, News
Related Articles