In the midst of the prevailing hostility towards the digital asset industry, the Blockchain Association has taken steps to address the situation. They have submitted a letter to the Inspector General of the United States Securities and Exchange Commission (SEC), urging an investigation into the circumstances surrounding Prometheum. The investigation stems from allegations that Prometheum received favorable regulatory treatment from the SEC. Marisa Tashman Coppel, Senior Counsel of the Blockchain Association, has raised concerns about this decision.
The Blockchain Association’s letter, dated July 12, specifically requests the SEC inspector general, Deborah Jeffrey, to examine the approval of Prometheum’s special purpose broker-dealer license (SPBD) by the Financial Industry Regulatory Authority. Additionally, the association expresses concerns about how co-CEO Aaron Kaplan obtained a seat to testify before the U.S. House Financial Services Committee in June.
The letter highlights the Blockchain Association’s worries about Prometheum being granted the SPBD license in May 2023, given the ongoing uncertainty surrounding the application of United States securities laws to cryptocurrency firms. The association also draws attention to Prometheum’s shift in public stance, from calling for regulatory clarity from the SEC in April 2021 to assert that a clear path to registration for digital assets exists and legislation is unnecessary. This change in position is particularly troubling to the advocacy group.
In June, the Blockchain Association announced that it had submitted a Freedom of Information Act (FOIA) request, seeking documents and communications related to Prometheum’s license. The subsequent call for an investigation into Prometheum originated from this FOIA request made by the advocacy group.
In addition to the Prometheum investigation, the digital asset community is grappling with other uncertainties. Notably, the SEC has filed lawsuits against two major exchanges, Binance and Coinbase. The lawsuits allege that both companies operated securities exchanges without proper registration, thereby violating regulatory requirements. Although the specific allegations in each case differ, both lawsuits revolve around the accusation of noncompliance with regulations.
The SEC accuses Binance, the largest cryptocurrency exchange globally, and its founder, Changpeng Zhao, of mishandling customer funds and unlawfully serving United States investors. Similarly, Coinbase, the only publicly-traded cryptocurrency exchange company, faces charges of operating an unregistered securities exchange.
Binance and Coinbase have vehemently denied these accusations, triggering debates about the ambiguity of regulations governing cryptocurrency exchanges and the absence of clear guidelines.