Prime Trust is a fast-growing Fintech and securities custody provider that appears to be in the midst of hockey stick trajectory.
This week, in a widely distributed email, Prime Trust founder and CEO Scott Purcell outlined the transition from startup, to market traction, to overwhelming success. The growth being experienced by Prime Trust is exemplified by the fact that he and his management team had to scramble to hire executives to handle booming platform demand, according to Purcell.
Prime Trust’s executive bench now includes veterans from top financial firms and Big Tech like JP Morgan Chase, Green Dot, the SEC, and many more. Purcell said he is “completely blown away and ecstatic” with the caliber of his team.
Prime Trust was born out of the transition from traditional capital formation to online capital formation and then digital assets. Earlier this year, Purcell commented that as finance started to move online things worked pretty well for traditional capital markets but when it came to private securities, the story was different.
Due to the advent of regulations, including but not only limited to, Sarbanes-Oxley and Dodd-Frank, it became practically impossible for businesses and real estate funds to go public as it was simply too expensive. Regulations surrounding decimalization, research, and suitability made it impractical for brokers to sell or make markets for small-cap stocks.
Getting regulation and compliance requirements right is hard to do. Too many rules and you squelch innovation.
“Thus the public markets [were] effectively closed to all but the very largest businesses (to raise capital) and their shareholders (for liquidity),” said Purcell.
That all changed with the advent of the JOBS Act, and the legalization of online capital formation under Reg CF, Reg D (506c), and Reg A+. Purcell saw an opportunity in these regulatory updates and Prime Trust was created.
Purcell says today we are witnessing an “explosion of broker-dealers filing with the SEC to create next-generation ATSs.”
“We will soon see some of these innovators delivering on the promise of active, liquid markets for private securities and real-estate interests,” good for the ecosystem – explains Purcell.
Purcell stated last month:
“Even though clearing brokers won’t hold private securities and even though the traditional public-markets settlement infrastructure doesn’t work for these transactions, Prime Trust and other technology-driven custodians are creating systems to accomplish these things. This solves the issues of custody, settlement, good-delivery and 12g. And it’s working, as evidenced by something that didn’t exist a year ago; our settlement platform “PrimeX” executed 600,000 counterparty transactions in Q1 of this year…and over 750,000 counterparty transactions just last month, an exponential growth rate, which even though mostly cash and cryptocurrency the platform is asset-agnostic and so will settle transactions of private business and real estate interests securely and frictionlessly. With the SEC and FINRA becoming more comfortable with trust and custody solutions (noncustodial broker-dealer models) for private securities, including tokenized securities, trust companies like Prime Trust will play a pivotal role in the growth of [Alternative Trading Systems] and [the] creation of efficient and orderly secondary markets.”
Crowdfund Insider contacted Purcell for some additional perspective.
“We’ve grown faster than anything we could have modeled, going from zero to over 300,000 counterparty settlements and over 70,000 wire and ACH transactions per month,” said Purcell. “In Q1 we were blown away to process 650,000 new AML check’s, and then went on to do 1.4 million AML’s in Q2. Our growth is breathtaking, and our team is amazing.”
Prime Trust Board member Jor Law, well-known in both the crowdfunding and crypto sector, had this to say regarding Prime Trust’s growth:
“Prime Trust was really in the right place at the right time. Supply met demand and then the platform executed,” said Law.
He added that Prime Trust has hired over 30 people in the past couple of months and they are still aggressively hiring.
“It’s really exciting to see global demand for our services accelerate even in the midst of economic uncertainty,” added Law.
Not every Fintech will be a success and the life of a startup or early-stage venture is really, really tough. Prime Trust has been in business for years. But it seems that Prime Trust has turned the corner and is driving outsized growth after many long months of early-stage struggle. This is great for the company and probably pretty cool for its investors too.