Separation between Flourish Cash and Flourish Crypto
Last updated: October 20, 2023
Estimated reading time: 2 minutes
Key takeaway: While Flourish Crypto1 and Flourish Cash2 are both offered by Flourish, they are offered by distinct legal entities, operate under different regulatory regimes, and are completely separate from a financial perspective. Clients depositing funds with Flourish Cash have zero exposure to Flourish Crypto; all customer deposits in Flourish Cash are held on deposit at our FDIC-member Program Banks, such as HSBC and PNC.
We launched Flourish Crypto in September 2021 to fill a gap in the financial advisor toolkit. Tens of millions of Americans were investing in crypto, yet there was an almost complete lack of products built for financial advisors and their clients. Flourish Crypto is a simple, secure, and compliant solution that opens up new opportunities for advisors, meets growing client demand, and facilitates visibility into more areas of clients’ financial lives for more holistic planning and risk management.
Recent volatility in the crypto market has prompted questions about the relationship between Flourish Cash and Flourish Crypto and we wanted to provide clarity about the distinction between our two core products.
Flourish Cash and Flourish Crypto are offered by completely separate entities.
Flourish Cash is offered by Flourish Financial LLC, a FINRA-Member broker-dealer. Customer funds are swept to our FDIC-member Program Banks,3 such as PNC and HSBC, where they are held on deposit, in cash. On every monthly statement, we state which banks are holding customer funds.
Flourish Crypto is offered by Flourish Digital Assets LLC, a commodity broker-dealer registered with the New York Attorney General, with custody and execution of trades handled by Paxos Trust Company, regulated by the New York Department of Financial Services as a trust company. Unlike many other crypto solutions, Flourish Crypto only allows clients to buy, sell, and hold crypto – there are no features like margin trading, staking, or futures within the product offering. Customer assets are held bankruptcy remote. Read more in our statement on Flourish Crypto security.
While both Flourish Cash and Flourish Crypto roll into the same parent entity, and Flourish facilitates transfers between the two programs, they are otherwise separate financially:
- Funds in Flourish Cash are held on-deposit, in cash, at FDIC-member Program Banks. Clients who deposit funds with Flourish Cash have no exposure to Flourish Crypto or cryptocurrency more generally. Every single monthly statement lists exactly how client deposits are allocated across our Program Banks.
- The performance of crypto has no impact on clients funds in Flourish Cash. All cryptocurrencies could drop to zero and it would not have a material impact on Flourish Cash or on the Flourish business overall.
- There is no “leverage” in either Flourish Cash or Flourish Crypto. Flourish Cash simply deposits cash at FDIC-member banks; Flourish Crypto simply allows clients to buy, sell and hold actual cryptocurrencies.
- More generally, the Flourish business is stronger than it ever has been in our history.
Continuing support for advisors
At Flourish, our mission is to provide RIAs with innovative access to a full suite of financial products that advisors can’t easily access today, allowing advisors to help clients with all aspects of their financial lives.
Recent turbulence in the banking industry has driven home the importance to many advisors of having a solution for the cash that clients have sitting in checking and savings accounts. Flourish Cash has seen record activity as a result, with thousands of invites and hundreds of millions in deposits each month.
At the same time, the 2023 Bitwise survey of advisors showed that, despite volatility, client interest in crypto remains high.4 “There are a lot of people accessing crypto in unregulated, unsecured ways,” said Flourish President Ben Cruikshank. “Whether you love it or hate it, in a world where tens of millions of Americans are investing in crypto, we believe it’s critical for advisors to have access to solutions that are at least as good as the options available to retail consumers.” With crypto outperforming traditional asset classes in 2023,5 we expect interest to continue to grow and will continue to offer advisors access to solutions that enable them to meet the needs of today’s clients, and the needs of clients in the generation to come.
Flourish builds technology that empowers financial advisors, improves financial lives and retirement outcomes, and delivers new and innovative investment options to advisors. Today, the Flourish platform is used by more than 650 wealth management firms representing more than $1.5 trillion in assets under management. Flourish is wholly-owned by MassMutual. For more information, visit www.flourish.com.