SEC is after crypto lenders
The SEC has now set its sights on crypto lenders ?
You know how upon entering some (most of?) crypto finance and DeFi websites you are asked if you’re a US citizen?
Well, that’s because the SEC (Securities and Exchange Commission) and its fellow organizations make it very hard, and sometimes impossible for many companies to target retail American clientele.
Most recently the SEC has set its eyes on crypto lending platforms – centralized companies that allow users deposit fiat or crypto and gain yields as high as 10-18%. They are able to do so notably by loaning out the deposited crypto at higher rates.
After investigating BlockFi, one of the providers of such services, the SEC decided that the company must have had registered its BlockFi Interest Accounts as securities, and charged it for failing to do so. This Monday the SEC announced that BlockFi agreed to settle $100M and cease the sales of its lending product.
Other centralized crypto lenders, like Gemini, Celsius Network and Voyager Digital, are reportedly also in the SEC’s sights, while Coinbase was threatened a lawsuit from the SEC last September over a proposed lending program. The exchange has dropped its lending project since.
⚖️The good thing is that BlockFi settlement and their intentions to get things straight with the SEC will help define a regulatory playbook for centralized crypto lenders. Some argue though that registering a new lending offer with the SEC would take ages, due to the SEC bureaucracy, its lack of experience with crypto and – let’s be honest – its general hostile attitude to it. In the meantime, US clients won’t be able to transfer funds to the BlockFi Interest Account.
The yield proposed by crypto lenders is so much more attractive than 1% or less proposed by the traditional banks ?
Supposing a nationwide crackdown on centralized crypto lenders, will Americans turn to the DeFi instead? Some of the DeFi platforms are still open for them, although sometimes with restricted features.
This, however, leads to another question: will the SEC try to regulate DeFi platforms, and if so, how?
