Patrick T. McHenry, the Chairman of the United States House Financial Services Committee has asked that the United States Securities and Exchange Commission (SEC) chief Gary Gensler hand over the documents that had to do with Prometheum’s licensing.
According to the letter sent by McHenry to Gensler,
“The approval comes as the Committee is considering addressing gaps in the regulation of digital assets.”
#NEW: Chairman @PatrickMcHenry led Republicans on the Financial Services Committee in letters to @FINRA and @SECGov regarding the shady approval of Prometheum as the only Special Purpose Broker-Dealer for digital assets.
— Financial Services GOP (@FinancialCmte) August 15, 2023
Prometheum Licensing: an SEC Affair
In context, the crypto-related firm was granted approval for a special broker license in May by the Financial Industry Regulatory Authority (FINRA) under the purview of the SEC. The license permits Prometheum to provide custody services for digital asset securities.
However, the approval has raised serious concerns in the cryptocurrency ecosystem and amongst lawmakers.
The SEC’s approval came shortly after the regulator levied enforcement actions against top cryptocurrency exchanges Binance and Coinbase. Crypto community members raised brows at the fact that a far less-recognized crypto firm received such a license from the regulator. Notably, Prometheum does not offer trading in top crypto assets like Bitcoin (BTC) and Ethereum (ETH).
Some Republican lawmakers who have been weary of the activities of the SEC challenged the timing of the license, citing that it “raises serious questions” especially as they were still busy working on regulation for the crypto industry. The approval came only a few weeks after Republicans in the U.S. Congress introduced a new draft Bill to reclassify digital tokens from securities to commodities.
Republicans Suspects Foul Play
During the U.S. House Financial Services Committee hearing which was held in mid-June, Prometheum’s Chief Executive Officer (CEO) Aaron Kaplan was allowed to stand as a witness in the hearing. Again, this action raised concerns. This forced Representative Mike Flood to tag the Prometheum approval from FINRA and SEC as ‘nonsense’.
Prometheum’s co-CEO said that the way forward for the crypto industry is through the current regulatory framework designed by the SEC. It sounded more like a political battle when the crypto community pointed out that Kaplan was only reading a pre-written note with narratives from Democratic members of Congress or the markets regulator.
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