Some Tokenization Is Just ‘Gambling’, Says Prometheum Co-CEO

Tokenization could revolutionize finance, but some offerings touting the term amount to abstract forms of gambling, according to Aaron Kaplan, founder and co-CEO of Prometheum, a digital asset securities firm that’s generated controversy in recent years.

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 taking away from the integrity of investing and moving towards a gambling mindset,” he told Decrypt in a recent interview.

“This is the meme-coin-ification of equities,” he added.

In 2023, Kaplan testified before lawmakers on Capitol Hill that the U.S. Securities and Exchange Commission had clearly laid out a path to compliance for crypto firms, provoking scrutiny from Republicans and crypto advocates who argued the status quo is unworkable.

With tokenization gaining traction under a crypto-friendly SEC following the reelection of U.S. President Donald Trump, Prometheum is trying to reposition itself as a firm specializing in on-chain securities, reprising a familiar tune, but in a slightly different way.

“It’s not really a pivot,” Kaplan said. “We’ve been working with issuers for a long time, and we’re very excited for more and more products to come on-chain.”

Through a panoply of licenses and subsidiaries, Kaplan said Prometheum can service the “entire lifecycle of a digital asset,” using its transfer agent, alternative trading system, and a special-purpose broker dealer, which also serves as a custodian. Kaplan said Prometheum can currently safeguard a handful of tokens but on-chain securities are coming next.

From the beginning, Kaplan said that Prometheum’s goal has been to “to integrate blockchain technology into market infrastructure to just create a better apple cart,” following the same rules but “eliminating the drag that occurs from legacy systems.”

The vision parallels BlackRock CEO Larry Fink, who predicted tokenization would become the “next generation of markets” by making markets more efficient in 2022.

Citadel Securities, one of the world’s largest market makers, urged the SEC in a letter earlier this week to treat tokenized equities in a similar manner to traditional counterparts.

“Simply put, while we strongly support technological innovations designed to address market inefficiencies, seeking to exploit regulatory arbitrage for ‘look-a-like’ securities is not innovation,” it argued, calling on the SEC to “resist self-serving requests for broad exemptions.”

In a statement weeks ago, SEC Commissioner and crypto task force boss Hester Peirce told firms structuring tokenized offerings to consider meeting with the regulator, noting that tokenization does not provide an exemption from existing rules and regulations.

In recent months, crypto exchange Kraken has backed xStocks on Solana, while trading platform Robinhood has introduced “stocks tokens” on the Ethereum scaling network Arbitrum. Robinhood clarified, following criticism from OpenAI, that its tokens represent contracts, and in the case of the ChatGPT maker, they give “indirect exposure to public markets.”

Earlier this month, Securitize CEO Carlos Domingo argued to Decrypt that the only true form of tokenization is “native,” meaning the asset itself is issued on-chain, as opposed to representing an asset that’s held, managed, and recorded somewhere else.

Kaplan agrees, but he thinks not all companies are getting the compliance element.

“I think people have started to view tokenization as an alternative to regulation,” he said. “It might be a derivative, but it’s a security, and therefore it still has to follow the rules.”

CORRECTION (JULY 23, 2025, 4:40 p.m.): Fixes title in headline to Co-CEO.