In the ever-evolving world of cryptocurrency, few stories are as intriguing as that of Prometheum. Founded in 2017, this little-known firm has recently made headlines by becoming the first to receive a license under the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) guidelines to operate as a digital asset securities broker-dealer 2. This milestone is significant, as it effectively treats cryptocurrencies like stocks and bonds, making it easier for firms like Prometheum to comply with regulatory requirements.

However, Prometheum's rise is not just about regulatory breakthroughs. The firm’s deep ties with Chinese interests have drawn scrutiny from U.S. politicians and regulators, adding a layer of geopolitical intrigue to its story.

Prometheum's journey into the crypto world is closely linked with Wanxiang Group, a large Chinese auto parts manufacturer that ventured into the cryptocurrency space during the boom period of the mid-2010s. In 2018, Prometheum agreed to jointly develop blockchain technology with Wanxiang Blockchain, a subsidiary of Wanxiang Group. This partnership also brought in a $12 million investment from Wanxiang’s Hong Kong-based blockchain arm, HashKey Group, which still owns 19% of Prometheum.

Wanxiang's involvement in the crypto world is storied. In December 2014, Xiao Feng, a Wanxiang executive and former Chinese central bank official, organized a forum on digital currencies in Hainan. This event marked the first high-level discussion of digital currencies like Bitcoin and Ether in China. Xiao's connection with Vitalik Buterin, the Russian-Canadian founder of Ethereum, further solidified Wanxiang's influence in the crypto space. Xiao even provided a $500,000 donation to Buterin’s Ethereum Foundation, leading to the establishment of Wanxiang Blockchain Labs, where Buterin became the chief scientist.

Despite these deep-rooted connections, Prometheum has been making efforts to distance itself from its Chinese partners amid increasing scrutiny on Chinese investments in the U.S. and worsening U.S.-China relations. In June 2021, the Committee on Foreign Investment in the U.S. (CFIUS) inquired about Prometheum’s foreign investors. Although a formal inquiry was never launched, Prometheum terminated its technology agreement with Wanxiang five months later. Aaron Kaplan, Prometheum’s co-CEO, emphasized in his congressional testimony that the firm is "proud to be an American-born, bred, and controlled company" and does not use any resources, code, or other assets from Wanxiang or its affiliates.

These efforts, however, have not convinced everyone on Capitol Hill. Just days before Kaplan’s testimony, Senators Tommy Tuberville (R-Alabama) and Kristin Gillibrand (D-New York) proposed a bill that would ban entities from China and other 'foreign adversaries' from acquiring stakes in U.S. digital commodity companies. In a Wall Street Journal op-ed, Tuberville argued that the legislation would "help wall off the burgeoning American digital commodity industry from Communist Party interference."

The skepticism in the U.S. about the crypto world’s links to China comes at a time when the industry’s future in China is itself uncertain. Despite the Chinese government’s prohibitions, users in China still trade about $90 billion of cryptocurrency-related assets monthly on Binance, the world’s largest cryptocurrency exchange. However, experts like Zennon Kapron, director of financial technology research firm Kapronasia, are doubtful that China can continue to play a central role in the global crypto industry. "Fundamentally, crypto was a risk [for the Chinese government] that didn’t solve any problems," Kapron says. "Those risks, around evading cross-border currency controls and investor protections, are still there."

Prometheum’s story is a fascinating case study of the intersection between cryptocurrency and geopolitics. As the firm navigates its American identity while distancing itself from its Chinese roots, it highlights the broader tensions and challenges facing the global crypto industry.

In the ever-evolving world of cryptocurrency, few stories are as intriguing as that of Prometheum. Founded in 2017, this little-known firm has recently made headlines by becoming the first to receive a license under the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) guidelines to operate as a digital asset securities broker-dealer 2. This milestone is significant, as it effectively treats cryptocurrencies like stocks and bonds, making it easier for firms like Prometheum to comply with regulatory requirements.

However, Prometheum's rise is not just about regulatory breakthroughs. The firm’s deep ties with Chinese interests have drawn scrutiny from U.S. politicians and regulators, adding a layer of geopolitical intrigue to its story.

Prometheum's journey into the crypto world is closely linked with Wanxiang Group, a large Chinese auto parts manufacturer that ventured into the cryptocurrency space during the boom period of the mid-2010s. In 2018, Prometheum agreed to jointly develop blockchain technology with Wanxiang Blockchain, a subsidiary of Wanxiang Group. This partnership also brought in a $12 million investment from Wanxiang’s Hong Kong-based blockchain arm, HashKey Group, which still owns 19% of Prometheum.

Wanxiang's involvement in the crypto world is storied. In December 2014, Xiao Feng, a Wanxiang executive and former Chinese central bank official, organized a forum on digital currencies in Hainan. This event marked the first high-level discussion of digital currencies like Bitcoin and Ether in China. Xiao's connection with Vitalik Buterin, the Russian-Canadian founder of Ethereum, further solidified Wanxiang's influence in the crypto space. Xiao even provided a $500,000 donation to Buterin’s Ethereum Foundation, leading to the establishment of Wanxiang Blockchain Labs, where Buterin became the chief scientist.

Despite these deep-rooted connections, Prometheum has been making efforts to distance itself from its Chinese partners amid increasing scrutiny on Chinese investments in the U.S. and worsening U.S.-China relations. In June 2021, the Committee on Foreign Investment in the U.S. (CFIUS) inquired about Prometheum’s foreign investors. Although a formal inquiry was never launched, Prometheum terminated its technology agreement with Wanxiang five months later. Aaron Kaplan, Prometheum’s co-CEO, emphasized in his congressional testimony that the firm is "proud to be an American-born, bred, and controlled company" and does not use any resources, code, or other assets from Wanxiang or its affiliates.

These efforts, however, have not convinced everyone on Capitol Hill. Just days before Kaplan’s testimony, Senators Tommy Tuberville (R-Alabama) and Kristin Gillibrand (D-New York) proposed a bill that would ban entities from China and other 'foreign adversaries' from acquiring stakes in U.S. digital commodity companies. In a Wall Street Journal op-ed, Tuberville argued that the legislation would "help wall off the burgeoning American digital commodity industry from Communist Party interference."

The skepticism in the U.S. about the crypto world’s links to China comes at a time when the industry’s future in China is itself uncertain. Despite the Chinese government’s prohibitions, users in China still trade about $90 billion of cryptocurrency-related assets monthly on Binance, the world’s largest cryptocurrency exchange. However, experts like Zennon Kapron, director of financial technology research firm Kapronasia, are doubtful that China can continue to play a central role in the global crypto industry. "Fundamentally, crypto was a risk [for the Chinese government] that didn’t solve any problems," Kapron says. "Those risks, around evading cross-border currency controls and investor protections, are still there."

Prometheum’s story is a fascinating case study of the intersection between cryptocurrency and geopolitics. As the firm navigates its American identity while distancing itself from its Chinese roots, it highlights the broader tensions and challenges facing the global crypto industry.