Crypto Firm Prometheum CEO’s In-House Testimony Raises Regulatory Questions

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Recent testimony before the US House by cryptocurrency firm PrometheumInc. Chief Executive Aaron Kaplan has caused a stir when it comes to regulatory clarity for digital assets.

The House Financial Services Committee brought in experts and insiders from the cryptocurrency community to talk the industry about how to regulate digital assets on Tuesday, focusing on a pair of bills regarding stablecoins and market structure.

Kaplans’ testimony differed from recent remarks by other cryptocurrency industry leaders in that he says current regulations are easy to comply with, arguing that regulatory agencies such as the Securities and Exchange Commission had clearly defined frameworks.

Prometheum is an institutional exchange distinguished by the fact that its subsidiaries have received, the first of its kind, approval from the Financial Regulatory Authority to operate as a specialized broker and registration with the SEC to operate as an alternative trading system to offer digital services. asset trading, clearing and settlement. The company was incorporated in 2021 and is expected to launch later this year.

The approvals came as the SEC sued Coinbase Inc., the nation’s largest crypto exchange, alleging the company operated an unregistered exchange and violated U.S. securities laws. Commenting on the lawsuit, Paul Grewal, Chief Legal Officer and General Counsel of Coinbases, said the SEC had not provided any clear rules for the digital asset industry. Grewal previously stated that although Coinbase attempted to register with the SEC, it was unable to do so.

During prepared testimony, Kaplan said there is a complaint path for crypto and that the SEC has clearly defined one for companies. He also denounced companies, without naming names, that are not regulated as reckless and illegal platforms.

He went on to add that industry participants advocating for new laws are simply unwilling to comply with applicable securities laws and regulations, and that new legislation is not in the best interests of the investing public or the blockchain industry. Mainly because it would take years to write this law.

His testimony was not without criticism, however, as Rep. Mike Flood asked if Prometheum offered bitcoin or Ethereum on its platform, which accounts for 68% of the $1 trillion market capitalization. according to CoinMarketCap. Kaplan replied no.

According to Flood, this reveals the platforms’ shortcomings and its limited product offerings, despite regulatory approvals. Especially since the company has not yet decided which assets it intends to offer, although the site lists Flow, Filecoin, The Graph, Compound and Celo tokens but these are not yet tradable and are only hypothetical. Notably, several of these tokens are under review by the SEC as part of the Coinbase lawsuit.

Additionally, the platform would only provide products to accredited investors, which Coy Garrison, former adviser to SEC Commissioner Hester Peirce, said showed an inconsistent market structure. This would be problematic for tokens with some sort of utility or use, where end users actually employ them to do something on networks such as gaming tokens. If only institutional users or whales can buy them, and not the end users, it would bring no value to those tokens.

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