Crypto startup hopes to become licensed broker-dealer, possibly a bank
Uphold, a cryptocurrency-based financial services platform, is hoping to soon be able to offer a securities division that will be able to list digital currencies and initial coin offerings (ICO). To achieve its goal, Uphold has announced a plan to acquire JNK Securities, a New York-based broker-dealer, which holds a license to operate as a broker-deal. The firm is now working with the Financial Industry Regulatory Authority (FINRA) for final approval of the deal.
If FINRA gives its approval, Uphold will be able to offer a range of securities transactions for its clients. It will be legally able to list ICOs, as well as other cryptocurrency-based assets that the Securities and Exchange Commission (SEC) has defined as securities. Uphold could also offer its crypto platform to existing JNK customers, expanding its operations into a new segment of institutional investments.
According to a statement provided by Uphold CEO Adrian Steckel, “We have kept a close eye on statements from global regulators regarding virtual currencies and tokens and believe that many crypto assets (particularly ICO tokens) may be treated as securities in some cases. Through our new securities division, we would be able to offer sales and trading of ICO tokens and fractional equities and provide other exchange services, under the oversight of the SEC and FINRA.”
Due to the tight reigns held by the SEC and FINRA that make it difficult for crypto companies to obtain licenses, many have sought different methods to receive regulatory approval. Coinbase recently purchased three different companies, giving it access to a number of options. The exchange now controls a broker-dealer license and licenses to operate as both a registered investment advisor and as an alternative trading system (ATS). Online retailer Overstock has also purchased a financial company, whose license could allow it to operate as an ATS through its tZero platform. All of the deals are still pending approval from FINRA.