Prometheum ATS Goes Live for Institutions11.01.2022
Prometheum ATS has gone live for institutional trading of digital asset securities as the firm also plans to launch retail trading, once it has received regulatory approval.
The alternative trading system is a FINRA member firm and registered with the US Securities and Exchange Commission. The ATS operates under federal securities laws and provides institutional investors trading digital asset securities with regulated protections and pricing transparency.
Aaron Kaplan, founder and co-chief executive of Prometheum, told Markets Media that the business plan has always been to build an ecosystem that can support the entire lifecycle of a digital asset security. Prometheum was founded in 2017 by a group of Wall Street attorneys with the aim of allowing digital assets to be traded under existing securities laws.
“The launch of the ATS, and hopefully, the approval of the special purpose broker dealer will be able to fulfil that goal,” he added.
Retail trading will launch once Prometheum Capital is approved as a special purpose broker dealer by the SEC.
The ATS uses Anchorage Digital Bank as a custodian for digital asset securities. Once approved, Prometheum Capital will be able to custody digital asset securities traded on the ATS for retail customers.
“There will be vertical integration of trading, settlement and custody across the lifecycle of digital asset securities, which we believe is a major distinguishing factor,” said Kaplan.
Won’t get the coverage it deserves, but a FINRA and SEC regulated ATS and broker-dealer paired with Anchorage Digital is HUGE. https://t.co/Q6XLiWMOrp
— Tyrone V. Ross Jr. (@TR401) October 28, 2022
Kaplan argued that the lack of investor protections required by federal securities laws in crypto and digital assets has led to the public getting hurt.
“The result is the disorderly unravelling that we are now seeing,” Kaplan added. “In order for Web3 to go mainstream there will need to be investor protections as required by federal regulation.”
The venue is built on blockchain technology which eliminates intermediaries and provides same-day settlement.
Digital asset securities supported at launch include Flow, Filecoin, The Graph, Compound, and Celo. Kaplan said Prometheum will look to expand this list in the coming months and quarters.
He added: “Prometheum sets itself apart by maintaining the ability to be sustainably compliant under current securities laws, ensuring the multi-layer protections and standards required on Wall Street.”
Prometheum said the ATS’s additional features include depth of market, Level 2 data, order and execution management, and customizable historical charts; full access functionality for all users and automated systematic matching for buy and sell orders of digital asset securities.
— Prometheum (@PrometheumInc) November 1, 2022
On November 1 Prometheum announced the appointment of Anoop Datta as chief operations officer of the ATS, overseeing day-to-day operations. Datta was previously global head of e-trading risk management and strategy at Goldman Sachs, with responsibility for overseeing electronic trading governance and strategy, and acting as a regulatory liaison.
Datta said in a statement: “I am excited to join Prometheum ATS during a time when Wall Street and the crypto industry are converging.”
Fidelity Digital Assets survey
The ATS launched as the Fidelity Digital Assets preliminary 2022 Institutional Investor Digital Assets Study found increased adoption of digital assets among institutional investors, despite the drop in market valuations.
Tom Jessop, president of Fidelity Digital Assets, said in the report: “While the markets have faced many headwinds in recent months, we believe that digital assets fundamentals remain strong and that the institutionalization of the market over the past several years has positioned it to weather recent events. Institutional investors are experienced in managing through cycles, and the largely inherent factors that they cited as appealing in this study will likely remain as the market emerges from this period.”
The study found that nearly six in ten (58%) of institutional investors surveyed are invested in digital assets globally—and 51% have a positive perception, up from 45% in 2021.
— Fidelity Digital Assets (@DigitalAssets) October 27, 2022
The research was led by Fidelity Consulting and Strategic Insights with Fidelity Digital AssetsSM and The Fidelity Center for Applied Technology. Coalition Greenwich conducted 1,052 blind interviews between 2 January and 24 June this year, the first time since the study’s inception that insights were collected during a bear market.
Institutional investors in the US and Europe reported increased familiarity and perception of digital assets, and more investments. Europe is now on par with Asia in terms of both overall adoption and positive perception, but the US still trails.
The study also found that nearly three quarters, 74%, of investors plan to buy or invest in digital assets in the future, up slightly from 71% in 2021.
We also saw that price volatility remains the key barrier to institutions adopting digital assets, but complexity, valuation, and market manipulation risks are also cited by one-third of the institutional investor respondents.
— Fidelity Digital Assets (@DigitalAssets) October 27, 2022
Price volatility was the greatest overall barrier to investment according to half of the investors surveyed.
“Other concerns cited by investors surveyed include lack of fundamentals to gauge appropriate value (37%), concerns around security (35%) and market manipulation (35%), and concerns around regulatory classification of certain coins as unregistered securities (33%),” said the report.
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