Cryptocurrency exchange buys New York broker

Cryptocurrency exchange Uphold receives approval to buy New York-based JNK Securities Corp. to enter regulated financial markets.

“Many cryptocurrency assets (in particular, ICO tokens) are considered securities. Thanks to the new broker-dealer status, the cryptocurrency platform will be able to trade ICO tokens, fractional stock assets and provide other exchange services,” said Adrian Steckel, chief executive officer of the Uphold exchange.

The terms of the agreement between the companies were not disclosed. If the financial regulator approves the deal, Uphold will apply for permission from the US Securities and Exchange Commission to operate as an alternative trading system. Although this activity is not the same as the activity of a public exchange, it will still be able to match buyers with sellers of securities on its platform. 

Earlier this month, the Coinbase exchange also announced its intention to buy several brokerage companies to offer security tokens to clients. Also Circle Internet Financial Ltd. intends to seek SEC approval to register as a brokerage and trading platform to allow investors to buy and sell tokens that are considered securities.

Regulated trading platforms could hold billions of dollars in tokens sold in an initial offering. Despite bans in various countries, companies earned $9 billion from ICOs in 2018 – twice as much as in the entire last year. The Securities and Exchange Commission considers most issued coins to be securities, and therefore issuers, including trading platforms, must register and comply with federal laws.

Uphold Exchange (formerly Bitreserve) currently allows customers to buy and sell eight different digital coins, as well as many traditional currencies, according to its website. The deal, if approved, would provide JNK clients with access to cryptocurrency trading, potentially attracting new institutional investors to Uphold's platform.

According to bloomberg.com