Amid $100M Settlement, BlockFi Plans TO Register Yield With SEC
The U.S. Securities and Exchange Commission (SEC) earlier announced that it fined crypto lending firm BlockFi $100 million. Now BlockFi has plans to register with the SEC to offer clients its popular high-yield crypto savings product.
As part of a $100 million settlement with the SEC and state securities regulators, BlockFi has announced plans to file an S1 to offer BlockFi Yield to US investors as a security.
BlockFi CEO, Zac Prince, commented:
“We intend for BlockFi Yield to be a new, SEC-registered crypto interest-bearing security, which will allow clients to earn interest on their crypto assets.”
According to a Bloomberg report last week, BlockFi would have to stop offering its high-yield account for customers in the United States, but the new information suggests the firm will offer it as a regulated product and under a new name.
SEC Chair Gary Gensler commented on the matter:
“This is the first case of its kind with respect to crypto lending platforms. Today’s settlement makes clear that crypto markets must comply with time-tested securities laws.”
According to BlockFi, existing US clients will be able to earn interest in their existing accounts but won’t be able to add more assets. Users outside the US are unaffected.
US bank savings accounts are not subject to securities laws, however, they must offer FDIC insurance. Crypto lending platforms like BlockFi have generally compared themselves to bank accounts offering returns of up to 8%, as compared to sub-1% returns in traditional savings account. They have not had FDIC insurance, which has rankled regulators like the SEC, who call these investment products similar to a mutual fund or other financial product.
Since last summer, BlockFi has been under regulatory scrutiny for its high-yield lending product. Around the same time, the SEC also shut down Coinbase’s attempt to launch its own yield offering. SEC has been criticized for its unclear approach to regulating crypto products.
