Last week news Financial Industry Regulatory Authority (“FINRA”) mentioned it had granted its first SEC-qualified custodian license without revealing the recipient. Today Prometheum Ember Capital announced it received a special purpose broker-dealer license for ‘digital asset securities’, which allows it to custody digital assets for retail and institutional investors. Licensed crypto custodians tend to be state registered.
Holding company Prometheum is structured more like a traditional finance (TradFi) capital markets firm. The SEC-registered Prometheum ATS is the exchange and a separate company Prometheum Ember Capital acts as broker-dealer and custodian. This separation is intended to reduce the potential to co-mingle assets, as seen at FTX. That said, FTX and Alameda were separate entities but still operated as one.
In today’s announcement, holding company co-CEO Aaron Kaplan commented on other crypto exchanges, saying, “These platforms’ non-compliance may pose serious risks to both retail and institutional investors. We expect that custodying assets in an SEC-registered broker-dealer will provide the regulatory protections needed to re-establish investor confidence, increase institutional adoption, and allow the industry to flourish.”
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