Prometheum – post-hearing buzz
Ever since Tuesday‘s House Financial Services (HFS) Committee meeting on the market structure and stablecoin bills, the participation of Aaron Kaplan, Founder and Co-CEO of alternative trading system Prometheum, has been the talk of Twitter. His support of the Securities and Exchange Commission’s (SEC) approach to digital asset regulation, i.e. enforcement, and his company’s business model are getting the “side eye.”
The top line is: what is really behind the strategy for the Prometheum trading platformm which doesn’t even trade Ethereum or Bitcoin? Did Democratic HFS members not realize what they were stepping into with Prometheum? Some of Kaplan’s answers felt scripted… by someone not Kaplan.
Beyond Rep. Mike Flood (R, NE) admonishment of Kaplan at Tuesday’s hearing, Matt Walsh of crypto venture firm Castle Island breaks down the mystery in a Twitter thread that has seen nearly 3.5 million views as of publication.
Walsh begins: “In the midst of the SEC bringing cases on Coinbase + Gemini, and giving the stiff arm to Robinhood and others, Prometheum gets approval for a first-of-its-kind Special Purpose Broker-Dealer (SPBD) for digital asset securities… Then Prometheum’s CEO somehow gets a seat in front of Congress yesterday and starts reading off pre-written notes clearly coordinating narratives with Democratic members of Congress (or the SEC).”
Prometheum – scripting
The Prometheum mystery is reminiscent of the SEC’s Investor Advisory Committee and it’s April 6 letter which neatly (or clumsily) recommended to SEC Chair Gary Gensler that his agency continue to do exactly what it’s doing with its digital assets strategy of regulation by enforcement. This was in spite of a healthy list of committee members who must have some differing opinions including IAC’s Chair, Christopher Mirabile, who said he supported a regulatory framework for digital assets in December. Read more about it.
Then, in late May, Senator Bill Hagerty (R, TN) and Rep. French Hill (R, AR) expressed their skepticism on the authorship of the letter with a letter of their own and asked Gensler for details on the origins of the IAC missive – thus insinuating that Chair Gensler and/or his team may have written it. The bicameral duo gave a deadline of June 7 for documents related to the letter. So far, no word on what was delivered to Congress by the agency, if anything.
Is another Congressional letter on Prometheum inevitable? It’s fair to say that both sides of the aisle prep their witnesses. But, Prometheum’s participation on Tuesday turned heads – not just on scripting, but the company’s qualifications to stand before Congress.
Prometheum – FOIA
Not waiting on a Congressional letter, The Blockchain Association’s counsel Marisa Tashman Coppel tweeted yesterday that her industry association submitted a FOIA request to the SEC “seeking information (docs & comms) about Prometheum and the ATS (Alternative Trading System). In the midst of aggressive SEC enforcement, Prometheum gets approval for first-of-its-kind Special Purpose Broker-Dealer (SPBD) for digital asset securities.”
What is an Alternative Trading System (ATS)? – Investor.gov
use case database
Polygon Labs has created a new industry resource titled, “The Value Prop.” See the website. Polygon says on the website’s home page: “This database features numerous unique use cases across many verticals, including sustainability, humanitarian work, education, and others listed below. This includes applications on any network, anywhere in the world.” Every lawmaker’s dream? You decide – start searching the database.
Sample use cases:
“AnotherBlock is a marketplace for users to share royalties with the artists they’re streaming. Artists like Rihanna have already joined the platform.”
“Empowa – A Mercy Corps Ventures (MCV) portfolio company, Empowa, has created a lease-to-own housing program for Africa’s informal economy. Using NFTs and on-chain payments”
“Project Guardian – JPMorgan partnered with the Monetary Authority of Singapore (MAS), DBS, and SBI Japan to test the potential of DeFi in traditional banking.”
DeFi Education Fund tweeted that Polygon “has gone a step further and given the community the ability to share their favorite use case on Twitter and then mint a free NFT, with all proceeds being donated to [DeFi Education Fund].”
hong kong crypto
China, er, Hong Kong appears to be “pressing” big local banks to take on crypto after perhaps seeing a window of opportunity while the United States fails to integrate digital assets.
According to a summary on The Block, The Financial Times reported, “‘[Hong Kong Monetary Authority (HKMA)] encouraged the banks to not be afraid,’ a person with knowledge of the discussion said (…) ‘There is resistance from a conventional banking mindset. We are seeing some resistance from senior executives at traditional banks.'” Read more. HSBC and Standard Chartered are mentioned as among the banks that are involved.
SEC exchange comments
In advance of this past Tuesday’s deadline, several organization made public their comments on the SEC’s controversial rulemaking proposal changing the exchange definition which would negatively effect digital assets. See a few:
still more tips
A Washington mystery: Where are the crypto tax regs? – PoliticoPro
BlackRock files for spot bitcoin ETF, with Coinbase as a crypto custodian – CNBC
Crypto giant Binance’s US affiliate fires staff after SEC charges – Reuters
Crypto Lender Abra Is Insolvent, Made Transfers to Binance, State Regulators Say – The Wall Street Journal
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