McHenry, Financial Services Republicans Press Regulators Regarding Prometheum Special Purpose Broker-Dealer Approval

Just reading this letter from Patrick McHenry and the House Financial Services Committee regarding Prometheum...good to see someone is pushing back against this obvious charade.

“While Prometheum claims it is the silver bullet for regulated digital asset offerings, it has not yet served a single customer. It has also refused to make public the digital asset securities that Prometheum ATS would support on its platform. Since Prometheum is limited to digital asset securities, and the SEC has refused to provide any binding guidance on what digital assets are securities, it is unclear what assets would even be eligible. Furthermore, Prometheum is not currently able to perform clearing or settlement services, which would be required to operate as an alternative trading system. It is unclear why FINRA would have chosen to approve a firm with no operating history and no track record of serving customers over all the applications that it has received.

“Even more troubling, the circumstances surrounding Prometheum raise serious national security and data privacy concerns. In 2018, Prometheum and Shanghai Wanxiang Blockchain Inc. (Wanxiang) entered into an agreement to jointly develop blockchain trading software. While the agreement was later terminated, and Prometheum claims all software was independently developed, the involvement of a Chinese entity in technology development in the early stages of Prometheum raises serious concerns. Furthermore, Kaplan testified before this Committee that 20% of his company is owned by this Chinese entity. According to SEC filings, a representative of that entity, Feng Ziao, serves as a Director in Prometheum. Wanxiang has deep ties to the Chinese Communist Party (CCP).”

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TLDR: Prometheum, a company aiming to revolutionize regulated digital asset offerings, hasn't served customers yet and lacks clarity on supported assets and SEC guidance. It lacks essential clearing and settlement services for operation and raises concerns due to ties with a Chinese entity and CCP involvement. Approval by FINRA is questioned given its lack of history and customer service.