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The US Securities and Exchange Commission (SEC) has been adamant that crypto lending products should be regulated. An anonymous source has now stated that the SEC is investigating BlockFi over its high yield interest rates.
BlockFi is one of the largest cryptocurrency lending platforms. The recent report shows that the commission is going after the New Jersey based firm.
SEC is investigating BlockFi
A recent report from Bloomberg referred to an anonymous source stating that BlockFi’s lending product has caught the attention of the US financial market watchdog. BlockFi offers a crypto lending product at a yield of up to 9.5% annually. This is significantly higher than the 0.06% interest rate charged by traditional financial institutions.
The investigation into BlockFi aims to discover whether the products offered by BlockFi can be classified as securities, thus falling under the regulatory authority of the SEC. However, the CEO of BlockFi, Zac Prince, has stated that the products offered by the platform cannot be securities.
This will not be the first time that regulators are turning their attention towards BlockFi. The firm has attracted the attention of state regulators, with some even taking action against the company.
Mid this year, the lending platform was ordered to seize offering its BlockFi Interest Account (BIA) by the New Jersey Bureau of Securities. According to the bureau, this product was against the securities laws. In New York, regulators ordered the platform to stop registering new clients.
SEC tightens the noose on crypto regulations
In recent months, the SEC has taken several actions to guarantee compliance across the crypto sector. The regulator has issued subpoenas and notices requesting more information about the operations of several crypto firms.
The SEC chair, Gary Gensler, has been vigilant to ensure that regulations in the digital asset space are introduced. Gensler led the commission is issuing a Wells Notice against Coinbase Global over a crypto lending product in September.
The notice threatened to sue Coinbase Global for a lending program it was planning to launch. After that, Coinbase suspended its plans to launch this program. The lending product was supposed to function similarly to other DeFi lending platforms. The product was set to offer a 4% interest on crypto assets.
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