Mounting pressure descends on the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) as prominent figures from the House Financial Services Committee demand clarity over the somewhat controversial granting of a special purpose broker-dealer (SPBD) license to Prometheum.
Questionable License Approval Raises Eyebrows
The committee, chaired by Patrick McHenry, joined by 20 other members, directed their inquiries at both SEC Chair, Gary Gensler, and FINRA’s head honcho, Robert Cook. A primary point of contention?
The bewildering rapidity of the license approval. Especially since Prometheum, touting itself as the answer to regulated digital asset offerings, remains yet to prove its worth in practical service delivery.
With a zero-client history, one could argue that the rush lacked justifiable grounds. This decision has left many pondering the possibility of missed steps or overlooked criteria in the approval process.
Prometheum, despite its establishment in 2017, remained largely under the radar, escaping significant attention until Aaron Kaplan, its co-founder and co-CEO, graced the House committee with his presence earlier in June.
The company’s announcement of having received the SPBD license in May had both cryptocurrency enthusiasts and lawmakers arching their eyebrows in skepticism, with a faction even calling for a deep-dive investigation into the depths of the firm’s operations and services.
Ties to the Chinese Communist Party?
Compounding the curious case of Prometheum’s lightning-fast license approval is a potentially more sinister subplot. The firm has been under the microscope, not only for its operational credibility but for alleged affiliations with the Chinese Communist Party (CCP).
Now, this isn’t just a light accusation. Ties with the CCP can hint at geopolitical influences and strategies that might run deeper than the mere granting of licenses.
Hence, the committee members didn’t mince words when they called on FINRA for a thorough breakdown, demanding answers on Prometheum’s SPBD license and any possible affiliations.
However, the firm wasn’t about to take these insinuations lying down.
In a swift response to these allegations, a representative from Prometheum mentioned the SEC had previously wrapped up an investigation on the firm’s ties with Shanghai Wanxiang Blockchain, and any suspicions regarding the CCP.
Kaplan, not one to hold back, had rebuffed similar claims earlier in July, when the calls for probing into the company’s operations first started ringing loud.
This latest development merely adds to the list of concerns regarding the regulation of digital assets in the US.
With the burgeoning growth of the crypto sector, regulatory bodies are tasked with not just monitoring, but also ensuring that the players they license are both legitimate and possess no ulterior motives.
The Prometheum case serves as a glaring reminder of the vigilant oversight required in this rapidly evolving domain. One can only hope that transparency prevails, and the questions posed by the House committee find their answers in the days to come.
