In brief

  • Anchorage and Prometheum are set to launch an Alternative Trading System (ATS).
  • Pending regulatory approval, the ATS will be a trading venue that is open to the public.

Anchorage, a digital asset platform tailored for institutions, has partnered with digital asset securities platform Prometheum to launch a public Alternative Trading System (ATS), per an announcement made today.

Pending regulatory approval, the ATS will be an SEC and FINRA regulated trading system that allows investors to trade digital asset securities. Headed by Prometheum’s wholly-owned subsidiary, Prometheum Ember ATS (“PEATS”), is a trading venue that matches buyers and sellers as a registered broker-dealer.

At present, this kind of service is only open to accredited and institutional investors, but PEATS—pending regulatory approval—will be available to the public.

“A public ATS for digital assets will allow more efficient order matching and better price discovery, bringing smaller price spreads and simplified participation for all investors,” said Aaron Kaplan, founder and co-CEO of Prometheum in a statement.

Once it’s launched, Anchorage Digital Bank will provide custody and on-chain settlement for the ATS.

What is an Alternative Trading System?

But what exactly is Anchorage and Prometheum’s alternative trading system, and how will it be regulated?

Co-founder and president of Anchorage, Diogo Monica, told Decrypt that PEATS is designated as a registered broker-dealer with the SEC, however, the ATS itself “is something that is a trading system but it’s not regulated as an exchange.”

This means the ATS is still a venue that matches buy and sell orders, but it does not require the actual registration with the SEC as an exchange. “You still need a broker-dealer because you still need the ability of buying and selling securities,” Monica said, adding, “But you’re not going on to actually create a full-blown exchange, you are creating this other subtype—which is an ATS—so both of those things are true simultaneously.”

When will final approval happen?

Monica did not tell Decrypt when exactly regulatory approval for the ATS may arrive, but he did have some positive things to say about the SEC.

“The SEC is a very different body than it was three years ago,” Monica said, adding, “They are now extremely sophisticated about digital assets. They have done enforcement actions against quite a few of these, and they have learned a ton in the process.”

What’s more, based on frequent meetings with the SEC, Monica told Decrypt that, “Internally, the people at the SEC are excited about these innovations and about these products in crypto.”

But by the same token, Monica doesn’t envy the SEC’s responsibilities. He noted that the crypto industry moves fast, and they want to get regulation right, despite the constantly changing environment.

“It’s very hard for you to do regulation in a space that is moving so fast, because something that you do today might have unintended consequences tomorrow,” he said.