Blockchain Association wants to know more about SEC's interactions with Prometheum

Quick Take

  • The Blockchain Association filed a Freedom of Information Act request with the SEC, requesting details about its interactions with Prometheum.
  • Prometheum has been a hot topic after its co-CEO claimed it’s possible for crypto exchanges to comply with U.S. law.

The Blockchain Association said Thursday that it filed a Freedom of Information Act request with the U.S. Securities and Exchange Commission, soliciting details about the regulator's interactions with a little-known crypto exchange called Prometheum amid a flurry of speculation on Crypto Twitter. 

"This whole story — Prometheum's ATS, its CEO's testimony in Congress — makes no sense," Blockchain Association chief policy officer Jake Chervinsky said on Twitter. "Something fishy is going on here."

Prometheum has been the subject of discussion since its co-CEO Aaron Kaplan was put in front of Congress earlier this week and expressed strong support for the SEC and its means of regulating crypto exchanges, while criticizing much of the industry. The company says it's a broker-dealer that has received approval from the the Financial Industry Regulatory Authority as an alternative trading system.

Kaplan's testimony in Congress came as many in the industry have bemoaned what they argue is a hostile regulatory framework in the U.S., especially with recent lawsuits filed by the SEC against exchanges Coinbase and Binance. As many have argued that new legislation isn't necessary, Kaplan said he didn't think that was the case. 

Prometheum plans for trading regulated crypto

Yet some industry experts heavily disagreed with his take. Rodrigo Seira, special counsel at Paradigm, noted that Prometheum plans to list cryptocurrencies that are securities in a regulated way but argued that the SEC takes the view that most cryptocurrencies are unregistered securities, meaning that they cannot be traded even on regulated exchanges.

"Therefore, Prometheum’s ATS won’t be able to trade any tokens unless projects first register the tokens with SEC. And as we have pointed out, there are effectively no tokens registered with the SEC because the current regime is not a viable option," Seira said on Twitter.

Robinhood, which is a regulated exchange, even delisted multiple cryptocurrencies on this very basis.


Keep up with the latest news, trends, charts and views on crypto and DeFi with a new biweekly newsletter from The Block's Frank Chaparro

By signing-up you agree to our Terms of Service and Privacy Policy
By signing-up you agree to our Terms of Service and Privacy Policy

When asked in the hearing by Republicans Congressman Mike Flood whether Prometheum lists bitcoin or ether, Kaplan replied that it doesn't list either of them. Flood then argued that, with the regulated exchange unable to list such cryptocurrencies, the statement that no further legislation is needed "doesn't make sense."

Prometheum said last year that it planned to support digital asset securities including Flow, Filecoin, The Graph, Compound and Celo. 

Prometheum responds

"As a founder and Co-CEO of Prometheum, I was invited to discuss the approval of a Special Purpose Broker Dealer License for our company's subsidiary, Prometheum Capital, and to lend my viewpoint on the regulatory and compliance debate surrounding digital assets in the U.S." Kaplan said in an emailed statement to The Block.

He noted that Prometheum's affiliated companies are registered with the SEC and are FINRA members.

"As for the Blockchain Association, we can't provide comment on their motivations but having passed the SEC and CFIUS reviews Prometheum is confident our organization has been vetted by relevant regulatory bodies," he added. 

(Updates with comment from company.)

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Tim is the Editor-In-Chief of The Block. Prior to joining The Block, Tim was a news editor at Decrypt. He has earned a bachelor's degree in philosophy from the University of York and studied news journalism at Press Association Training. Follow him on X @Timccopeland.


To contact the editor of this story:
Nathan Crooks at
[email protected]