Aug 16, 2023

Republicans on the U.S. congressional committee that oversees the Securities and Exchange Commission (SEC) are demanding agency Chair Gary Gensler explain how Prometheum Inc. won its unique approval as a broker-dealer for crypto.

Video transcript

Republican lawmakers are questioning the Securities and Exchange Commission's chair Gary Gentzler on how promethium won its rather unique approval as a broker dealer for crypto. Well, joining us now to discuss is the man who has our unique approval to cover regulations. That's none other than Coindesk global policy and regulation. Managing editor Nick Day who is also the editor of coin desk's absolute positively must read state of crypto newsletter. Good morning, Nick. Good morning. Thank you. So we have 23 members of the House Financial Services Committee sending a letter to Gary Gensler. I'm sure he opens the mail uh and doesn't use email. Uh doesn't like things electronic apparently. Uh He wants some details. Break down that letter for us. What did it say? You, you read them, you read their mail before they, before Gensler does tell us what, tell us what is said in it before Getler opens it up. Yeah, so, you know, uh it's basically kind of, you know, some arguments as what we've heard before, right? Lawmakers are uh concerned about two things really one the timing of the per medium approval. Uh You know, they're questioning whether or not the sec granted uh per meum, the special purpose broker dealer license uh knowing that the House was discussing legislation about who should be the proper overseer for crypto as far as the US regulatory system is concerned. And then the other is the actual approval itself. You know, uh there's been questions since this was announced about whether or not per medium would be able to do the things it claims it will be able to do as of right now. Promethium doesn't list or trade any cryptocurrencies. So, uh you know, Jerry is still out on that one, but there's some real questions about whether or not, you know, this license would actually allow promethium to trade crypto asset securities or whatever. Uh you know, without the participation of the issuers. Is this, is this a, it's just like a giant like conspiracy theory, like what's going on here? Like, like really real. Let's let, let's talk, you know, Lawrence is on a conspiracy theory train this week yesterday with the aliens today with the conspiracy theory. I'm just saying like I, no, because I'm anti conspiracy theory. So I'm I'm more fascinated by the fact that they exist. I mean, Marxism is a giant conspiracy theory. It exists. But um you know, like what's going on here. Yeah, I mean, there's definitely some, I think legitimate questions to be asked about. Uh you know, you know, for me in particular Promethium's uh you know, operating theory, right. Uh we're still waiting to see whether or not it will be able to list any tokens. It had a number of tokens as examples of things that could list before it launched or before it announced it had secured the approvals. But they later said that that list was just kind of a, you know, a grab bag of currencies. They weren't actually looking at that as a real list. I, I guess my, my question here is like, what's, what's up, everyone's, um, nose, if you will, I'm trying to use a different part of the body. Like, what's making them nuts about promethium? Like, what is it? They don't like Kale, they, they're like, ah, he, you know, he us on the check, like, what's going on? What, what, what, what's the issue here? All of the above? I mean, so on the one hand you have, you know, all these crypto companies coin base, finance us crack and whoever, uh, you know, trying to do this thing where they listen and trade cryptocurrencies for, you know, the retail public to, you know, do whatever, uh, invest, buy, sell, use for a coffee, maybe. Um, and they've been saying for years now, and this has been, you know, pretty much a party line for the crypto industry that there's no regulatory clarity at the federal level. There is no way for crypto companies to become licensed in such a way that they can continue doing what they're doing without having to pay heavy fees or abide by regulations that in their words, don't account for, you know, crypto attributes. In other words, you have all these crypto exchanges saying that they can't be, you know, national securities exchanges or they can't have a separate broker dealer, uh you know, clearing house and exchange function because the listing, the crypto tokens are not securities or they don't meet certain requirements of securities or securities laws don't, you know, match or don't, you know, apply in this 21st century paradigm. And then along comes from me m and says, oh, well, actually, you know, we can figure it out, we figured it out, we've gotten the approvals and we're good to go. Um So I think there was, you know, on the one hand, a lot of skepticism because again, per medium hasn't launched anything. But also, you know, a lot of these companies have spent years saying, you know, this thing is not possible, but under the current regime and per medium is now claiming it is possible. So there's a bit of, you know, kind of natural animus towards that as well. On the congressional side, you also have the fact that that lawmakers have actually been discussing and debating crypto for a while now. And, you know, as we saw the House Financial Services Committee uh is in the process of trying to make crypto legislation happen. And some of these bills would give the CFTC, some greater spot market authorities over certain crypto currencies, but give the FCC some better defined, you know, limitations or parameters for how they're overseeing things. And so on that side, you know, you have lawmakers saying, ok, well, is this just, you know, Sec Chair Galer attempt at, you know, bypassing or, you know, superseding Congress by taking this power before lawmakers can actually do anything with that. I mean, this is the feeling that Kaplan is a patsy for, for uh Galer. Uh that seems to be one that, that theory. Yes, I haven't seen like one way or another. Yeah, like there, there's a bit of that, but we haven't seen much one way or another. I think besides, you know, the hearing from the Financial Services Committee a while back, Nick really quickly before we go, has promethium responded to any of this. Like, Promethium was in the news a lot when they first came out, they were responding to these allegations. I feel like they've gone quiet. Um Have they, have they said anything? They haven't responded to the most recent letter yet that I've seen, um, in the past, they've said that, you know, the allegations are unfounded that, uh you know, they are going to be able to listen trade crypto. Um Just have to wait and see. All right, Nick, thanks for joining the show this morning. That was Coin Desk, global Policy and regulation. Managing editor Nick Day. Don't forget to sign up for the state of crypto newsletter on coindesk dot com.

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