BlockFi is under SEC scrutiny for its high-yielding Bitcoin and Ethereum products after months of protests from other regulators as well as Alabama, Kentucky, Vermont and New Jersey when we can see more on our latest Bitcoin news today.
BlockFi is under heavy scrutiny for its high-yielding crypto savings accounts, and now the US SEC has begun an investigation into the company. The New Jersey-based crypto company enables users to borrow and borrow crypto assets like Bitcoin and Ethereum, as well as stablecoins like Tether and USD Coin. Plus, the return on dollar-pegged crypto assets is higher than either bank. Users can currently earn 9.5% on their tether holdings and BTC deposits can be profitable at 4.5% interest. The SEC is starting to look into whether interest-bearing accounts are securities and if the commission finds that BIA is a security, BlockFi will operate without registering with the SEC.
Financial regulators in Alabama, Texas, Kentucky, New Jersey, and Vermont have all raised similar concerns about BlockFi products in the past few months, and regulators in New Jersey have specifically ordered them to stop BlockFi from shipping products to state residents . This isn’t the first time the SEC has targeted the crypto credit and lending sector. The commission even threatened to sue Coinbase on the words of CEO Brian Armstrong if the company continued with the Lend product.
BlockFI BIAs similar to LEND would have allowed users to earn 4% interest on their USD holdings, but the company ultimately turned it down and didn’t even get started.
Meanwhile, Celsius is a company that has interest in crypto holdings and is also facing the same regulatory scrutiny as the company targeting BlockFi. Centralized businesses aren’t the SEC’s only target. SEC chairman Gary Gensler also turned his attention to defibrillating, as many projects like Compound and Aave offer productivity tools no different from BlockFi and Celsius. Gensler even said that decentralized financial platforms have to do with securities law, but also some with commodities law and banking law.
As recently reported, Texas and New Jersey have discovered that Celsius’s API partner program is reaching these accounts, as API partners can then advertise and sell accounts that earn their customers interest from unregistered Celsius. According to regulators, this has not been sanctioned by the state because Celsius has not registered with either the agencies or the SEC to begin selling securities as tradable investment products.