Dapper Labs Expands US Presence with InnReg’s Blockchain Compliance Expertise
Dapper Labs is a blockchain technology company founded in 2018 and headquartered in Vancouver, Canada. It is known for creating some of the most popular blockchain-based applications and games, including CryptoKitties, NBA Top Shot, NFL All Day, and UFC Strike. These products leverage blockchain technology to offer users unique experiences in collecting, trading, and owning digital assets, such as non-fungible tokens (NFTs), representing memorable moments or digital collectibles in various sports and entertainment domains.
The company focuses on building a decentralized digital world where users can own and derive value from their data and digital assets. Dapper Labs developed its own blockchain, Flow, designed to support the large-scale use of NFTs and decentralized applications (dApps). Flow powers not only Dapper Labs’ products but also those of other developers and major brands looking to create blockchain-based experiences.
As of recent reports, Dapper Labs has raised substantial funding, with a valuation reaching $7.5 billion. A range of investors back the company, including Andreessen Horowitz, Union Square Ventures, and Google Ventures, among others.
Objective
Dapper Labs engaged InnReg to help prepare its US operations for money transmission activities and build the compliance infrastructure needed to support those activities after regulatory approval.
The engagement focused on translating money transmitter requirements into a practical operating model for a high-volume blockchain business. This included:
Mapping state and federal regulatory obligations
Preparing for recurring reporting and license maintenance
Building AML and transaction-monitoring processes
Reviewing information security and vendor-management requirements
Developing operational policies and procedures
Coordinating responsibilities across legal, product, engineering, finance, risk, and compliance teams
The broader objective was to help Dapper move from licensing preparation into a sustainable regulated-business framework that could support ongoing payments operations in the US.
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Challenges
Dapper Labs was preparing to operate within the US money transmission regulatory framework, which introduced a wide range of state and federal requirements.
The company needed to account for:
State-specific licensing and reporting requirements
Money Services Business Call Reports
Financial statements and other regulatory filings
Business changes that could trigger regulator notifications
AML monitoring, investigations, and suspicious activity reporting
Information security and vendor-management requirements
The challenge extended beyond licensing. Dapper also needed to define how these obligations would be managed across internal teams, including legal, product, engineering, finance, risk, information security, and compliance.
InnReg's Solution
InnReg helped Dapper Labs prepare for money transmission operations by developing a structured framework around the regulatory and operational requirements identified in the engagement.
The work included:
Regulatory reporting and license maintenance: Developing processes to track state and federal reporting obligations, annual renewals, financial statements, MSB Call Reports, and business changes requiring regulatory notification.
AML and transaction monitoring: Supporting AML policy development, risk assessment, transaction monitoring, investigations, escalation procedures, and suspicious activity reporting.
Operational policies and procedures: Developing and reviewing policies related to complaints, records retention, consumer protection, business continuity, permissible investments, surety bonds, and other money transmission requirements.
Information security: Reviewing Dapper’s information security policies and procedures against requirements and guidance including the GLBA Safeguards Rule, New York cybersecurity requirements, PCI DSS, and CFPB examination procedures.
Vendor management: Supporting processes for initial and ongoing due diligence, compliance recordkeeping, sanctions monitoring, and cybersecurity-related oversight.
Organizational readiness: Helping map responsibilities across relevant internal stakeholders and establishing processes, timelines, training, and project tracking to support ongoing money transmission obligations.
InnReg’s role was to help Dapper prepare not only for regulatory approval, but also for the operational responsibilities that would follow.
Client Results
The engagement gave Dapper Labs a structured framework for managing the regulatory and operational requirements associated with US money transmission activities.
The compliance framework was designed to support a business operating at significant scale. Today, Dapper Labs reports more than $1.4 billion in cumulative gross merchandise value across its ecosystem, while Flow has surpassed 42 million accounts and approximately 1 billion lifetime transactions. The company also works with 50+ global brand partners.
By addressing the operational requirements associated with regulated payments alongside the licensing process, InnReg helped Dapper establish compliance infrastructure suited to the complexity and scale of its US activities.
How Can InnReg Help?
InnReg helps money transmitters develop a structured framework and support for managing regulatory and operational requirements around crypto business models. If you're looking for a reliable and experienced team of exports to build your compliance program without the cost of a full-time hire, reach out to us.
