Uphold, a well-regarded traditional and crypto trading app, had already attracted millions of users worldwide with its crypto trading experience and user-friendly approach. But the company had a bigger, more ambitious vision, which “embraces a future where people and businesses around the world have access to safe, transparent, fair and affordable financial services.”
Equities, of course, are an integral element for investing and trading, and that’s where Uphold faced a significant challenge. But the worlds of crypto and equities trading are very different from a regulatory perspective. So Uphold turned to InnReg for help. InnReg worked with Uphold to help offer registered broker-dealer services and make that complexity completely invisible to end-users.
For end-users, Uphold wanted to make it simple to use the value stored in their crypto wallets to purchase fractional shares of companies like Apple, Berkshire Hathaway, or Cisco. It needed to be as easy as A-B-C. Yet, behind the scenes, such trades need to follow a complex set of rules and meet complex middle- and back-office requirements.
To achieve its goal, Uphold faced much bigger challenges than adding new products or features. This move was transformative. The transformation required reaching three main goals. As a practiced hand in regulation and compliance for fintechs, InnReg helped guide Uphold through each of them:
- Acquiring a broker-dealer to settle fractional buy- and sell- trades that initially originated from an end-users crypto wallet
- Moving the broker-dealer from a fully-disclosed to an omnibus structure so that it could manage trades within one, proprietary set of digital books and records in the broker's name
- Obtaining regulatory approval from FINRA to provide these new services
On March 31, 2021, Uphold announced that it received regulatory approval to purchase JNK Securities, a U.S. broker-dealer, making it one of the first cryptocurrency firms to own a broker-dealer approved to offer equities.
InnReg is a global regulatory compliance and operations consulting team serving financial services companies since 2013. We also help launch and scale fintechs with innovative compliance strategies and cost-effective managed services, assisted by proprietary regtech solutions.