Prometheum CEO Warns Tokenization Risks Gambling as Regulatory Debates Intensify

Prometheum’s founder and co-CEO Aaron Kaplan has drawn a sharp distinction between legitimate tokenization and what he describes as speculative “gambling” in the digital asset space. In an interview with Decrypt, Kaplan criticized certain tokenized offerings for lacking meaningful rights to underlying assets, arguing they erode investment integrity and mimic the speculative dynamics of meme coins. “When a company issues a token representing a real-world asset, such as a stock, but it doesn’t have any right to the underlying, what you’re really doing is moving towards a gambling mindset,” he said [1]. His remarks highlight ongoing tensions in the crypto industry between innovation and regulatory compliance.

Prometheum, a firm known for its controversial role in digital asset securities, is positioning itself as a custodian for on-chain securities as tokenization gains regulatory traction in the U.S. Kaplan emphasized the company’s ability to manage the “entire lifecycle of a digital asset” through its licensed subsidiaries, including a special-purpose broker-dealer and alternative trading system. While the firm currently safeguards a limited number of tokens, it is expanding to support on-chain securities, aligning with a broader push to integrate blockchain into traditional financial infrastructure.

Kaplan’s critique of “meme-coin-ification” of equities echoes concerns raised by regulators and market participants. The SEC, under a crypto-friendly administration following the 2024 election, has faced calls to clarify its stance on tokenized assets. In a recent letter, Citadel Securities urged the agency to treat tokenized equities similarly to traditional counterparts, warning against “self-serving requests for broad exemptions” that exploit regulatory arbitrage [1]. Meanwhile, SEC Commissioner Hester Peirce reiterated that tokenization does not exempt offerings from existing rules, advising firms to engage with regulators proactively [1].

The debate reflects a broader industry divide. Securitize’s CEO Carlos Domingo recently argued that only “native” tokenization—where assets are issued directly on a blockchain—is legitimate. Kaplan agrees with this principle but stresses the importance of compliance, noting that some companies misuse tokenization as a shortcut to bypass regulations. “It might be a derivative, but it’s a security, and therefore it still has to follow the rules,” he said [1].

Market activity suggests growing interest in tokenized assets. Kraken has launched xStocks on Solana, while Robinhood introduced “stock tokens” on Arbitrum, though it clarified these represent indirect exposure to public markets via contracts. These moves underscore both the potential and the risks of tokenization as firms navigate uncharted regulatory territory.

Kaplan’s testimony before Congress in 2023, where he claimed the SEC had outlined a “clear path to compliance,” drew criticism from crypto advocates and Republicans who argued the agency’s approach was inconsistent. His current strategy—leveraging Prometheum’s infrastructure to support on-chain securities—aims to align with evolving regulatory expectations while avoiding the pitfalls of speculative projects.

The industry’s trajectory remains uncertain. While proponents like BlackRock’s Larry Fink envision tokenization as the “next generation of markets,” critics warn of fragmentation and regulatory pushback. As firms like Prometheum and Citadel Securities advocate for clearer guidelines, the SEC’s role in defining the boundaries of tokenization will be critical. Kaplan’s warnings against conflating tokenization with gambling serve as a reminder that innovation must be balanced with accountability, particularly as the market matures [1].

Source: [1] [Some Tokenization Is Just 'Gambling', Says Prometheum CEO] [https://decrypt.co/331477/some-tokenization-just-gambling-prometheum-ceo]