Crypto Startup Uphold Moves to Become Licensed U.S. Broker-Dealer

Digital money platform Uphold is looking to become a Finra-registered broker-dealer following a new acquisition, the company says.

AccessTimeIconJun 27, 2018 at 12:10 p.m. UTC
Updated Sep 13, 2021 at 8:06 a.m. UTC
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Digital money platform Uphold is looking to become a broker-dealer in the U.S. after acquiring a registered firm called JNK Securities, it was announced Wednesday.

The company has now filed with the Financial Industry Regulatory Authority (FINRA) for approval of the change of ownership to become a registered broker-dealer.

Ultimately, Uphold hopes to offer security tokens, fractional equities and other exchange services under the supervision of the U.S. Securities and Exchange Commission (SEC) and FINRA, as part of its new securities platform.

Uphold's general counsel, Ben Sherwin, explained the move to CoinDesk, saying: "We've acquired a New York-based broker-dealer to expand our product base and offer more digital assets to our users."

If approved, the acquisition would allow Uphold to begin offering regulated products to its customers.

Sherwin said:

"You file with FINRA to become a broker-dealer and that broker-dealer status allows us to engage in activities that we wouldn't be able to without that license. It also aligns with our mission of transparency and trust because we're submitting to the regulation that is appropriate and responsive to what the regulators are saying."

Uphold later plans to file to become an alternative trading system (ATS) with the SEC, he added.

While JNK and Uphold will operate as two distinct companies until the merger is complete, Uphold intends to bring JNK's employees in to help with Uphold's expansion plans.

"JNK is an ... organization with a 25-year history of being in the financial markets. They're quality people and good operators ... running a broker-dealer requires a certain amount of expertise and the quality of the people there gives us a leg up," Sherwin said.

The flow of expertise will go the other way too, as Uphold intends to help JNK start offering cryptocurrency research products, on top of the reports it already offers looking at a variety of industries.

"From a process standpoint, they have license and we're hoping to expand their license," Sherwin said. "So we benefit from their institutional reach and they benefit from our consumer reach."

"This reduces our regulatory overhand and shows how serious we are about regulatory oversight [because] Uphold is based upon transparency and trust," he concluded.

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