Uphold Crypto Exchange Acquires JNK Securities
Cryptocurrency exchange Uphold just agreed to acquire New York-based broker-dealer JNK Securities Corp. It’s yet another sign of cryptocurrency platforms positioning themselves in more regulated markets.
The news was first reported by Bloomberg, which cited a statement by Uphold CEO Adrian Steckel about upcoming cryptocurrency regulations:
“Many crypto assets (particularly ICO tokens) may be treated as securities in some cases. Through Uphold’s new securities division, the digital currency platform would be able to offer sales and trading of ICO tokens and fractional equities and provide other exchange services.”
Under the deal, JNK’s existing customers would also be able to purchase cryptocurrencies through the Uphold platform, potentially opening up Uphold to institutional investors and high net worth individuals.
Terms of the agreement were not disclosed. The next step is for the agreement to get approved by the Financial Industry Regulatory Authority (FINRA). After that approval occurs, Uphold will seek approval from the SEC to operate as an alternative trading system (ATS). An ATS is not considered a public bourse – like the NYSE – but it has many of the same functions, allowing the exchange to match regulated buyers and sellers of securities.
Uphold’s acquisition of JNK Securities Corp. is the latest in a series of acquisitions by larger US cryptocurrency exchanges. Coinbase, for example, recently announced it was buying a trio of firms, including a broker-dealer, in order to offer customers blockchain-based securities in a regulated environment.
Just before Coinbase announced their acquisition, Circle Internet Financial had announced plans to pursue registration as a brokerage and trading venue with the SEC, allowing it to help investors buy and sell tokens deemed to be securities.
This is big news for the cryptocurrency industry: it’s yet another sign of cryptocurrencies going “legitimate” and becoming part of the mainstream financial ecosystem.
Despite the crackdown on unregulated securities sales in recent months, companies continue to raise enormous amounts through ICOs. In 2018 alone, Bloomberg reports that companies have raised more than $9 billion through ICOs – more than double the amount raised in all of 2017. Many of these coins are securities, which means many ICOs constitute unregistered sales of securities.
Uphold was formerly known as Bitreserve. The US-based crypto exchange supports 8 different cryptocurrencies as well as a handful of traditional fiat currencies. Uphold has offices in California, Shanghai, London, and Portugal. If Uphold’s acquisition is approved, JNK’s existing clients would be able to access crypto trading through the Uphold platform, potentially bringing new institutional investors to Uphold.