Prometheum, which provides the infrastructure for the trading, clearance, settlement and custody of digital asset securities, plans to make a bigger push into the wealth management space and recently hired Marc Nichols, a former product director at Arbor Digital, to help with that effort.
Nichols, a frequent speaker on digital assets and the blockchain, last month left Arbor Digital, a subsidiary of Arbor Capital, an RIA firm headquartered in Anchorage, Alaska. He will serve as Prometheum’s director of RIA business development, leading the company’s focus on the RIA market, where it sees a big opportunity going forward.
Prometheum co-CEO Aaron Kaplan says the firm does not see itself as a “crypto company” but rather “a market infrastructure company for securities on chain.” He argues Prometheum has taken a different approach to creating and deploying its technology, one they hope will remove many of the difficulties RIAs have had participating in the space historically.
Unlike a lot of companies in the crypto space, Prometheum was not born out of Silicon Valley or venture capital; it was created in 2017 by a group of Wall Street securities attorneys. Compliance with securities laws has been its backbone.
“The whole goal was to integrate the benefits of blockchain technology, which would be record keeping, the issuance, trading and settlement of an asset, the movement of that asset on chain, etc., into market infrastructure,” Kaplan said.
The company operates out of two subsidiaries: Prometheum ATS, its marketplace that allows for public trading; and Prometheum Capital, which last year became the first SEC- and FINRA-approved special purpose broker/dealer allowed to custody digital asset securities. Kaplan said the firm has already soft-launched custodial services for Ether (ETH), with plans to roll it out fully by the end of June.
“Prometheum Capital’s custodial services, starting with ETH, are tailored to meet the stringent regulatory and compliance standards promulgated by the federal security laws,” Kaplan said in a statement. “Our unwavering commitment to compliance and investor safeguarding drives this milestone, signifying substantial progress towards establishing a new paradigm for blockchain-enabled market infrastructure.”
But crypto asset custody is just a fraction of what the company expects to do; its focus is broadly on ‘33 Act securities on the blockchain, which includes equities, debt, structured products, Treasuries, money markets and ETFs.
The special purpose broker/dealer also licensed Prometheum to conduct post-trade processing, which includes clearance and settlement, custody, financing and books and records. In April, the company selected Broadridge Financial Solutions for back-office capabilities, including its Shadow Post Trade Processing and Business Process Outsourcing.
Prometheum hopes to eventually integrate into the advisor’s desktop, and Kaplan said its system speaks the same compliance language as those regulated in the securities industry.
“From a compliance perspective, it makes it a lot easier for entities licensed under the securities laws to communicate and feel comfortable integrating with other entities that are also licensed under the securities laws that have to meet the same standards,” Kaplan said.
“We provide the infrastructure that’ll allow financial advisors to give their clients exposure to different digital asset securities, whether that’s what some people will call virtual currencies that we call investment contract digital asset securities, or whether it’s just any sort of form of ‘33 Act security issued on chain.”