Passfolio was a fintech company that aimed to democratize access to the US financial markets by offering commission-free trading of US stocks and cryptocurrencies to users worldwide.
Founded in 2018, Passfolio provided a mobile application enabling individuals from over 170 countries to invest in US dollars, stocks, and digital assets. The company’s platform was accessible and easy to use, with no minimum investment requirements, making it particularly attractive to new investors and those in international markets.
Headquartered in San Francisco, California, Passfolio was regulated by the Securities and Exchange Commission (SEC) and was a member of the Financial Industry Regulatory Authority (FINRA). However, in October 2022, Passfolio ceased its operations, and its client portfolio was acquired by Sproutfi, an investment platform that continues to offer similar services in the US market.
Objective
Passfolio aimed to create a platform that would enable Brazilian investors to access international investments through both stock and cryptocurrency trading.
The goal was to navigate the US market’s complex compliance landscape and integrate dual trading services while maintaining regulatory adherence and providing a seamless user experience.
Background
Passfolio approached InnReg in its early stages with a vision to establish itself as a US broker-dealer and offer a cryptocurrency trading platform.
Their primary target market was Brazilian investors seeking a low-cost, accessible route to international investments. The ambition to combine stock and crypto trading within a single app led to a range of complex regulatory challenges. Passfolio sought InnReg's expertise to navigate these challenges and help bring its innovative platform to fruition.
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Challenges
Passfolio faced several significant challenges in their endeavor to provide both stock and cryptocurrency trading:
Securing the necessary regulatory approvals for both stock and cryptocurrency trading was a complex process, requiring adherence to multiple regulatory frameworks.
Establishing separate business entities for each service while maintaining a unified and seamless user experience posed a significant organizational challenge.
Advertising efforts targeting Brazilian audiences required compliance with FINRA’s marketing guidelines, necessitating meticulous planning and execution.
The process of becoming an RIA involved extensive documentation, regulatory meetings, and platform modifications, adding another layer of complexity to the project.
InnReg's Solution
InnReg implemented a comprehensive strategy to address Passfolio’s challenges:
Regulatory Navigation:
InnReg assisted in obtaining the necessary approvals for launching both trading services, effectively navigating the complex regulatory landscape.Business Structuring:
Helped structure separate entities for the stock and crypto products, maintaining compliance while preserving a seamless user experience.Marketing Compliance:
InnReg consultants thoroughly reviewed the client’s advertising materials and educated their marketing team on FINRA’s guidelines.RIA Registration:
InnReg assisted Passfolio with the process of becoming a Registered Investment Advisor (RIA), which included gathering the necessary documentation, handling meetings with regulators, and applying required platform modifications.
Client Results
With InnReg’s assistance, Passfolio successfully launched its platform, adhering to regulatory standards.
This achievement enabled Brazilian investors to access international investments through both stock and cryptocurrency trading. Additionally, the engagement facilitated the client’s transition to a new brand under new management.
