Republicans Demand Probe Into SEC Approval of Prometheum

Republicans on the Financial Services Committee (FSC), which oversees the US Securities and Exchange Commission (SEC), have demanded an explanation of why Prometheum Inc., an unknown firm that has never done any crypto trading, was allowed to provide crypto broker-dealer services.

Lack of transparency, ties to Communists

In an official letter published on the FSC website, legislators requested transparency regarding the approval process and brought up the issue of risks to national security. Reportedly, Prometheum is connected to the Chinese Communist Party.

The 23 House legislators who signed the letter are perplexed by how the company beat out other applicants in the SEC registration process. They also question the timing of the SEC’s decision.

The only special purpose broker-dealer to this day

At the end of 2020, SEC introduced a category of special purpose broker-dealers (SPBD), which would be able to custody and transact in digital asset securities if approved by the Financial Industry Regulatory Authority (FINRA).

FINRA did not approve any companies for the first two years. On May 17 this year, Prometheum subsidiary Ember Capital LLC became the first firm to obtain approval for providing such services. It remains the only one to have secured approval to this day.

The letter states:

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.

The legislators believe the SEC may have presented Prometheum as a poster company for its stance that the US doesn’t need any new laws to regulate crypto.

Prometheum’s management body insists the firm maintains full compliance with the registration process. Co-CEO Aaron Kaplan assures the company will demonstrate how to build a crypto platform that abides by all relevant regulations.