New York-based Prometheum Ember Capital (PMC) has secured regulatory approval to become the first crypto-focused company to register with the US SEC and FINRA as a special-purpose broker-dealer.
Prometheum Inc. — PMC’s parent company — announced the development on May 23, saying it will enable PMC to operate as a “qualified custodian” for digital assets. However, the company will not be offering services for Bitcoin (BTC) due to license restrictions.
Prometheum Inc. co-CEO Aaron Kaplan said:
“We expect that holding assets with an SEC-registered broker-dealer will provide the regulatory protection needed to restore investor confidence, increase institutional adoption and allow the industry to thrive.”
No Bitcoin, no trading
The approval allows PMC to hold digital assets that could be considered securities, which currently excludes Bitcoin (BTC) and includes virtually every other cryptocurrency.
PMC did not disclose the list of assets it will support and said it will internally review which cryptocurrencies can be considered digital securities.
In addition, the license also does not allow the company to process crypto transactions through clearing and settlement, so PMC cannot offer trading or exchange services.
However, Prometheum said it is confident it will secure the necessary approvals in the future and plans to link its subsidiaries to offer a full range of crypto services, including trading, once that happens, according to a statement. Bloomberg report.
Road to clarity in the regulations?
The successful registration of Prometheus with the SEC is an outlier in the sea of disapproval the regulator has handed out to crypto companies and their various schemes in recent years.
Many exchanges and crypto companies in the US operate under state licenses due to the unclear regulatory landscape and the worried attitude of federal regulators towards the industry.
The SEC recently said that the crypto industry does not need new regulations as the current framework is sufficient to deal with it as it considers most of them securities. Meanwhile, the regulator has also admitted that Bitcoin is not a security in the past.
PMC’s license follows that sentiment by excluding Bitcoin but allowing other “digital asset securities”.
Gary DeWaal, senior counsel at Cat Enforcement Lawyer and CFTC Bloomberg News that the approval shows there is a “pathway” to future clarity for the space and more approvals for companies looking to get into digital assets that are securities under similar licenses.
However, he added that ultimate regulatory clarity can only be achieved by properly defining what can and cannot be considered an effect.