US regulators, including the Securities and Exchange Commission (SEC), have ongoing civil cases against major cryptocurrency companies including Binance, Coinbase and Ripple, but not all companies have been subject to the same treatment.
Gary Gensler, who has served as SEC Chairman since 2021, has been widely criticized by many lawmakers and industry leaders for a โregulation by enforcementโ approach to cryptocurrency companies and offerings. Some of the cases ended up in federal courts to determine what can be considered a security in the United States, and not all of the judges' decisions have necessarily been favorable to the regulator.
The commission filed a lawsuit against Ripple in December 2020 over XRP as an allegedly unregistered offering, but received a partial summary judgment in July that the token was largely not a security. Coinbase, which appeared to expect legal action ahead of the SEC lawsuit filed in June, managed the regulator in response to its case, claiming that the exchange attempted to "come in and register" without success or adequate response.
Prometheum, a crypto company that gained a lot of media attention in June after co-CEO Aaron Kaplan testified before the House Financial Services Committee on digital asset regulation. received approval from the Financial Industry Regulatory Authority as a special purpose stockbroker (SPBD) for digital asset securities in May. Some of the company's subsidiaries, which also deal in digital assets, have successfully registered with the SEC.
โPrometheum was built specifically to comply with federal securities laws and create the first digital asset securities trading platform subject to those laws, including investor protection rules,โ Kaplan told Cointelegraph.
Kaplan's approach would seem to suggest that certain companies such as Coinbase, Binance and Ripple launched services in the US with the intention of trying to change existing regulations. Major players have at times pushed for legislation favorable to crypto companies: Coinbase CEO Brian Armstrong has has had a regular presence in Washington DC and encouraged users to endorse political candidates in support of pro-crypto policies.
According to Prometheum's co-CEO, certain crypto companies "have been working to rewrite or modify existing laws in their favor and to the detriment of retail investors," speculating that current frameworks are incapable of addressing digital assets. Many industry leaders and legislators have echoed similar concernsstating that crypto companies in the US have an uphill battle in recognizing which digital assets qualify as securities.
Four key bills could redefine digital asset regulations. @Prometheus remains at the forefront with plans to offer regulated trading and custody of digital assets. Read more about crypto bills on Cointelegraph: https://t.co/vxfdDSxPsu#Digital resources
โ Prometheus (@PrometheumInc) July 25, 2023
Kaplan suggested that the fact that Prometheum was able to obtain an SPBD license was proof that regulatory compliance was at least possible. However, the approval has led to calls for research the company by advocacy groups including the Blockchain Association and crypto-minded members of Congress.
โWe are concerned that the [SEC] "It gave Prometheum 'favorable' treatment in exchange for supporting the Commission's policy objectives, or that Prometheum is leveraging personal connections with the Commission to gain an unfair advantage in the market," saying the Blockchain Association in July. "Most importantly, we are concerned that Chairman Gensler is using Prometheum and the SPBD licensing process as a means to thwart Congressional efforts toward legislation by continuing to spread the false narrative that the law is already clear regarding the digital asset securities".
Kaplan added:
"From the moment Prometheum received its SPBD license, there has been a seemingly concerted effort by several industry associations and legislators to discredit the more than six years of hard work we have put into building our company."
Related: Binance and CEO Changpeng Zhao ask court to dismiss SEC lawsuit
It's unclear whether Prometheum's approach will work for existing players in the space in an effort to evade enforcement actions, or for promising projects aware of regulatory challenges in the United States. David Hirsch, head of the SEC's cryptocurrency enforcement division, reportedly said at a Sept. 19 conference that although the commission was currently involved in several civil lawsuits, it would continue to bring actions against companies it believed violated securities laws. from the US, including decentralized finance. Projects.
Gensler will testify before the U.S. House Financial Services Committee on Sept. 27 at a hearing on SEC oversight. According to a September 22 memo, lawmakers ask the SEC chairman on matters including policies on digital asset custody activities and expanding the commission's authority over crypto companies.
Magazine: Crypto Regulation: Does SEC Chairman Gary Gensler Have the Last Word?
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