BlockFi claims it now has the regulatory confidence it needs for a future registration process.
The US Securities and Exchange Commission (SEC) recently announced a $50 million settlement with BlockFi, a crypto lending platform. Furthermore, allegations that BlockFi failed to declare its crypto loan product offers and sales resulted in an extra $50 million penalty.
BlockFi Interest Accounts
According to SEC Chair Gary Gensler, this is the first case of its kind involving crypto lending services. The Securities Act of 1933 and the Investment Company Act of 1940 apply to crypto markets.
The crypto lending platform advertised and offered public BlockFi Interest Accounts (BIAs) to the SEC’s displeasure. BlockFi’s popular savings program gives yearly percentage rewards up to 9.25 percent on crypto.
The company had to report its BIA offers and sales but SEC registration did not exclude this.
The combined fine of $100 million is the greatest ever levied against a cryptocurrency company. According to the notification, for more than 18 months, BlockFi ran an unregistered investment business. It sold securities and held over 40% of its assets in investment securities, excluding cash.
Exceptional Product
BlockFi, on the other hand, said that the settlement only applies to their BIA product for US customers. It also ensures zero effects on that institutional offerings like BlockFi Prime and Personalized Yield.
Current US customers will receive funds but not add assets or establish new BIAs. This will not affect mon-US customers.
In contrast, the crypto lending platform plans to “file or discreetly submit a registration document on Form S-1 with the SEC for the offering of BlockFi Yield (BY)”–making it the first crypto interest-bearing securities registered with the SEC, according to the company.
Accounts will change to BIA accounts after the registration process unless a client tells BlockFi that they don’t want that. New deposits and new customers in the US will sign up.
“This is another example of BlockFi leading the market and benefitting its clients,” says CEO and Founder Zac Prince.BlockFi Yield will be a new SEC-registered crypto interest-bearing investment, allowing consumers to earn interest on their crypto holdings.
