Crypto Asset

Crypto Lender Nexo Invests in SEC-Regulated Broker-Dealer Texture Capital

Cryptocurrency lender Nexo has made a strategic investment in Texture Capital, a two-year-old blockchain firm specialized in issuing, tokenizing, and trading the digital securities.

Without specifying the size of the stake it acquired, Nexo said the latest investment was part of Texture Capital’s seed funding round.

Texture Capital is a member of the Financial Industry Regulatory Authority (FINRA) and is also a registered broker-dealer with the Securities and Exchange Commission (SEC). The firm operates an institutional marketplace for raising private capital through blockchain and smart contracts.

The broker also provides its partners with straight-through process and workflow when they raise capital via a digital security offering or trade the tokenized securities in a secondary market.

The transaction came on the heels of a regulatory campaign against the DeFi industry under the auspices of consumer protection. In particular, Nexo has reportedly received requests for information from New York Attorney General Letitia James as an investigation is underway into its lending operations.

As of now, Nexo and other crypto lenders have not subpoenaed by regulators, which means they are under no obligation to respond to the NYAG’s request. However, the acquisition puts Nexo on a firmer regulatory footing with the US regulator and allows the platform to perform all operations in a regulatory compliant manner.

Nexo will capitalize on Texture’s regulatory approval to expand its operation into the US market. The latter operates as an alternative trading system (ATS), which facilitates transactions in securities that are not publicly-traded. It creates a way for companies to tokenize equity and issue it on a blockchain without running afoul of regulatory obligations.

Many Fintech and blockchain firms have responded to US regulators’ classification of certain digital tokens as securities and therefore coming under the SEC’s supervision. Wall Street’s top watchdog says that ‎any entity that wants to become an ATS needs to register with the SEC as a broker-dealer and become a member of a self-regulating organization, such as ‎FINRA.‎

Speaking about the latest developments, Richard Johnson, founder and CEO of Texture Capital, said: “We are delighted to welcome Nexo as an investor in our seed round. Nexo has built an impressive, global crypto business, and we look forward to partnering with them as Texture continues to build on our vision to revolutionize capital markets leveraging blockchain technology and DeFi.”

Commenting on the news, Tatiana Metodieva, Head of Corporate Finance and Investments at Nexo added: “Nexo invests actively across geographies and segments to expand its strategic presence, technological solutions framework, and regulatory readiness in the digital asset ecosystem. Texture’s growth strategy, service orientation, and compliance foresight align well with Nexo’s vision for the US market. We expect this partnership to further strengthen Nexo’s commitment to state-of-the-art execution and service to its community.”