Following the Securities and Exchange Commission’s (SEC) charge against Blockfi for failing to register its retail crypto lending product and a $100 million fine, the crypto lender Nexo has announced that it will no longer enable US consumers to earn interest on new savings wallet top-ups. Nexo clients based in the United States, on the other hand, will continue to earn interest on their existing savings wallet balances maintained prior to the announcement.
Nexo ‘Announces Significant Savings for US Customers’
The SEC took action against crypto loan site Blockfi last week, fining the company $100 million. The news comes after a number of state regulators, including those in New Jersey, Kentucky, Texas, Alabama, and Vermont, issued warnings to Blockfi regarding the firm’s interest-bearing accounts.
Certain states issued cease and desist orders, requiring the business to immediately halt issuing Blockfi Interest Accounts (BIAs). Following the imposition of sanctions against Blockfi by the US securities regulator, the crypto lending firm Nexo declared “significant savings for US customers.”
According to Nexo Josh, the moderator of the Reddit subreddit r/nexo, Nexo clients in the United States may notice certain modifications to the Nexo interest-bearing savings program. Nexo Josh added that the company “voluntarily made changes” to its earn interest product in the United States in order to “adhere to newly-announced recommendations.”
Nexo’s representative stated that non-US clients are “not subject to the SEC’s recommendations and are therefore impacted.” Existing US clients will continue to receive interest on their balances; however, Americans will no longer earn interest on newly added balances.
“As of today, new top-ups to your [Nexo] savings wallet will not earn interest until the earn interest product is restructured,” the statement from Nexo Josh stated. Additionally, the agent emphasised that “any assets withdrawn from your savings wallet, even if later returned, would be classified as new top-ups and will not earn you interest.”
Nexo, a cryptocurrency lender, Is Considering Launching an Earn Interest Product 2.0
For new Nexo clients based in the United States, the earn interest product will cease to exist in its current form. Nexo intends to rebuild the product and reintroduce it as a 2.0 version of the earn interest product. “Our team and legal counsel are working around the clock to provide solutions for our US clients that make earn interest product 2.0 as broadly available as possible while remaining compliant with current regulatory realities,” Nexo Josh concluded.
Meanwhile, Blockfi was not the only cryptocurrency firm targeted by US securities regulators, as Kentucky and Alabama issued warnings to the cryptocurrency lending company Celsius regarding interest-bearing accounts. The SEC’s current position is that interest-bearing crypto savings products “are not as safe as bank or credit union deposits.”
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.