U.S. Lawmakers Request SEC and FINRA to Provide Records of Their Discussions During the Review of Prometheum's Registration Application

PANews reported on May 23 that U.S. Congress members want to know what the U.S. Securities and Exchange Commission (SEC) discussed with the Financial Industry Regulatory Authority (FINRA) when setting requirements for Special Purpose Broker-Dealers (SPBD). They suspect that these agencies, along with cryptocurrency trading and custody service provider Prometheum, are setting an unwelcome precedent. House Financial Services Committee Chairman Patrick McHenry, along with Subcommittee Chairmen Bill Huizenga and French Hill, all Republicans, expressed their dissatisfaction in a letter to SEC Chairman Gary Gensler regarding the SEC's response on March 26 to inquiries from 48 members of the House Financial Services and Agriculture Committees about Ethereum.

In his response to the March 26 letter, Gensler stated that he was "unaware of any details of Prometheum's future business plans." The congress members are concerned about the potential precedent and told Gensler, "It is highly likely that the SEC and FINRA discussed the permissible activities of SPBDs throughout Prometheum's SPBD application process and final approval." Therefore, the congress members are now requesting all non-public communications and records between the SEC and FINRA regarding Prometheum's SPBD application process, permissible SPBD activities, SPBD custodial digital asset securities, and the regulatory classification of Ethereum. They have set a response deadline of June 5.

Since receiving FINRA's SPBD approval in May 2023, Prometheum has been highly controversial. Its CEO, Aaron Kaplan, expressed support for regulating cryptocurrencies under existing securities laws during a congressional hearing, which has unsettled many in the cryptocurrency industry.