Bloomberg spoke with Gary DeWaal, Financial Markets and Funds senior counsel, regarding crypto startup Prometheum Ember Capital. The Financial Industry Regulatory Authority (FINRA) granted Prometheum the first special purpose broker-dealer license under a regulatory framework proposed by the Securities and Exchange Commission (SEC) in December 2020, allowing it to custody digital assets securities. Although such entities are not authorized to custody digital assets that are not securities, such as bitcoin, Gary noted that this is an important milestone for license approvals. “It now opens the door for a SEC-registered entity to have custody over some digital assets securities in this space, so that’s a very important statement. It shows that there’s a path.”

However, Gary indicated that this first approval is “not the be-all, end-all solution.” He argued that the most critical regulatory issue remains unanswered in the crypto space in the US — determining when, in connection with secondary market trading, a digital asset is a security or a non-security.

Crypto Startup Says It Found Path to Register With SEC Under a Broker Rule,” Bloomberg, May 23, 2023