Compliance Programs for Startups

Compliance and Cybersecurity Program and Support for Crypto and Blockchain Assets Lender and Custodian

Background/Opportunity

• A global innovator in the use of blockchain and cryptocurrency holdings needed support to ensure two core elements of its business. First, as both a lender and a custodian of assets, it needed to meet the compliance requirements of the many national and local jurisdictions where it operates. Second, it required a cybersecurity approach to meet global financial standards.

Challenge/s

• Operating in the world of cryptocurrencies creates potentially higher degrees of risk in the prevention of money laundering.
• The client’s business model and global scope required a complex regulatory structure across countries and, in the U.S., individual states.
• Operating globally also entails adopting and complying with data protection and data security best practices.
• The client works with a wide range of affiliates and distribution partners as well as customers of its white label solution.

InnReg's Solution

• InnReg completed a full risk assessment of the client’s business.
• InnReg designed an end-to-end outsourced compliance and cybersecurity program, including:
  • Regulatory filings and updates
  • Anti-Money Laundering and Suspicious Activity Reporting
  • Management and protection of client and transaction data
  • Vendor and partner management
  • Marketing and advertising compliance

Client Results

• The client has the ability to manage thousands of end users and millions of dollars in assets in a compliant manner where it does business.
• The client has successfully avoided the risks inherent to their business model.
• The client has saved extensively by using dedicated, outsourced compliance professionals rather than building an in-house team.

Testimonial

“Francesco and his team helped us build and scale a global crypto company, navigate the many complex legal and regulatory challenges, and design a product that helped us satisfy our many constituents – customers, partners, local, national and international regulators. The team also provided critical guidance in the areas of risk management, security, HR, and strategic roadmap considerations.  They have become a full extension of our team and we would not be in the same place today without their endless guidance, support, and great judgement.”

-- Client CEO

InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

Fractional Shares Trading

Objective: Launch a revolutionary new equity stock trading platform for retail investors.

Background/Opportunity

• The client wanted to create a trading platform that would be fun, easy, and affordable. The platform needed to deliver their mission to help new investors learn about stock trading in a low risk and low-cost environment. Their goal was to make Wall Street accessible to a wider Main Street audience. The product design included online brokerage accounts, plus gifts of stocks delivered via gift cards and e-cards.

Challenge/s

• In pursuit of their mission, the client had to build a platform attracting younger and lower net worth investors to equity trading but at the same time avoid raising regulatory red flags or generating negative press. Given their business model and plans for growth, they had to create a cost-efficient operational system, but with a complex product design including custodial accounts for minors, shares of stock in the form of gift cards and e-cards, fractional trading, and other areas that required a clear regulatory strategy.

InnReg's Solution

• Designed and deployed a compliance platform that supported accurate transactions at high speed and with a high level of information security.
• Advised on the negotiation of profitable vendor contracts, including a multi-year clearing agreement.

Client Results

• Raised $15 million in Series A funding after their successful launch and positive press.
• Stock shares delivered via gift cards contributed an incremental $50 million in revenue from sales at partnering national retail outlets such as Target, Safeway, and Staples.
• Won numerous awards in fintech trade publications including Product of the Year and Most Disruptive Company.

Testimonial

“Francesco has been the driving force in establishing our compliance, legal, and risk management functions. His experience and profound knowledge of the industry have been instrumental in protecting our brand during high-growth periods, as well as through challenging times. A clear communicator, Francesco has established strong relationships with industry regulators. In addition to his experience and knowledge of business, law, and regulations, Francesco has an extremely organized approach to problem-solving. I have been very happy to work with Francesco and look forward to doing so again in the future.”

-- Client President and COO

InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

Equities Gifting Solution

Objective: Launch a new service that makes it easy to give stocks and index funds as gifts.

Background/Opportunity

• The client was a start-up supported by the Y Combinator incubator program. Their mission was to design a new service for people who wanted to give the unique gift of equity stocks, using an easy and fun platform. Their product strategy blended retro and fintech because it hearkened back to the days when parents and grandparents gave bonds to children to seed their college fund.

Challenge/s

• The client needed to manage numerous compliance regulations spanning the brokerage/investment advisory environment to support stored-value gift cards and the trading environment to support online investing, including custodial accounts for minors.

InnReg's Solution

• Established a manageable set of regulatory requirements.
• Advised on the adoption of the most efficient regulatory structure to accommodate the desired business and revenue model.

Client Results

• The company was acquired by a competitor based on their successful product launch with substantial positive press, and their potential to become a viable competitor in their own right.
  
  

InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

Robo Advisor

Objective: Launch a micro-investing app designed to increase portfolio growth potential compared to conventional savings and investment accounts.

Background/Opportunity

• The client believes every single person would benefit from an investment approach that includes small, daily contributions. However, decades of experience as investment advisors had taught them this level of discipline is rare even with seasoned investors. Their platform solves this problem by rounding up a client’s credit and debit card purchases to the next dollar, and then automatically depositing this “small change” into a passively managed investment account.

Challenge/s

• The client needed guidance on how to identify and address potential regulatory compliance issues related to targeting international users. They also asked for support in identifying the best vendors to support the international launch of an innovative investment program and product in a regulated environment.

InnReg's Solution

• Conducted a comprehensive gap analysis. 
• Ensured that the compliance program was implemented in accordance with all SEC requirements for a Registered Investment Advisor.
• Addressed all compliance issues related to targeting and managing international accounts.
• Sourced and introduced regulated vendors who could support international clients.

Client Results

• The client was successfully launched in 2016 on a strong compliance foundation.
• They closed their first round of VC seed funding soon after launch and have moved on to securing Series A funding.

Testimonial

“InnReg understands fintech, online brokers and robo-advisors like no other compliance consultants we approached. They keyed in immediately on all the potential regulatory issues that could affect our business when targeting international users. Their CEO Francesco Matteini has built a substantial network of third-party providers. He helped us evaluate and select the right vendors to meet our needs within our budget and timeline."

-- Client Founder and President

InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.