The CEO of cryptocurrency lender Nexo, Antoni Trenchev, has stated he has a plan for when securities regulators come a-knocking on their door.
At the moment, pressure is limited to U.S.-based exchanges such as BlockFi and Celsius. However, any broker who has US clients will face regulators eventually, including Nexo, which is based in London.
Trenchev commented:
“We’re following the situations very closely. When I say we, I mean both the legal team internally at Nexo and also the law firms we retain in the United States.”
Nexo’s plans are to acquire a SEC-licensed broker dealer to offer changed versions of its products through. Nexo is also holding talks with nationally chartered banks as possible partners of the exchange, who might allow Nexo to offer its products under a bank charter. Another possible measure is offer securities to non-accredited investors. An exemption must be applied for in that case.
Coinbase scraps plans to offer a lending product
Nexo, Celsius, BlockFi, and Ledn offer both depository yield-earning products and a lending product that is propelled by the interest rates that each broker charges on the house’s lending side. The biggest US broker, Coinbase, has scrapped plans to launch a lending product. The product they had planned would have come with a 4% annual percentage yield.
BlockFi under fire over BIA product
Last week, Texas regulators alleged the platform’s Interest Account (BIA) product was a security and filed for a cease-and-desist order against them as well as their affiliated companies, BlockFi Trading and BlockFi Lending. The order has not come into force yet. The final decision is pending a hearing in October. BlockFi will be able to respond to the allegations formally at that time. Until the hearing, their activity won’t be affected.
Joseph Rotunda, director of enforcement at Texas State Securities Board, said:
“This legal action affords BlockFi and its affiliates the opportunity to respond to our allegations and present admissible evidence.”
Celsius in the same boat
Again in Texas, crypto lending startup Celsius is facing off against regulators as the crypto lending industry faces greater and greater scrutiny. Last week, the Texas State Securities Board accused the broker of marketing unregistered securities in the form of interest-yielding crypto deposits. Celsius’ hearing is scheduled for February next year. An order similar to the one against BlockFi will be considered then. Joseph Rotunda said:
“We are accusing Celsius of selling these investments in Texas without first complying with important laws designed to protect investors.”
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