Regulators in three U.S. states are approaching BlockFi’s crypto account

Cryptocurrency update

U.S. state officials open a new front in regulatory crackdown Cryptocurrency A business aimed at BlockFi, which raised $ 14.7 billion by providing interest-bearing cryptocurrency accounts.

recently Texas, New jersey And Alabama It claims that the account is equivalent to offering unregistered securities.New Jersey ordered the company to stop offering products July 29, And other US states have threatened to take similar steps unless BlockFi can discourage them.

“Our rules are simple. If you sell securities in New Jersey, you must comply with New Jersey securities law,” said Andrew Brooke, Deputy Attorney General of the State, on Tuesday. “No one can get a free pass just because they operate in a rapidly evolving cryptocurrency market.”

BlockFi based in New Jersey Tweet He believed that the interest-bearing account was “not a security” and “legal and appropriate for crypto market participants.” “We adhere to our commitment to fight for the right to gain consumer interest in crypto assets,” he added.

The surge in regulation at the state level was especially important as Washington’s national authorities are scrambling to develop cryptocurrency rules.

Political observers were led by Guruville Grewar, who left the post elected to run the Securities and Exchange Commission’s executive office, at the Attorney General’s office in New Jersey until July 16. Encrypt.

Another interesting aspect of the BlockFi crackdown was the involvement of states on either side of the US political division. New Jersey is a blue state. Alabama and Texas are red. At least to some extent, the transpartisan nature of cryptocurrencies seemed possible.

Alexis Goldstein, Director of Fiscal Policy at the Open Markets Institute in Washington, said:

BlockFi received $ 3 billion in March from investors such as Bain Capital Ventures and Tiger Global Management. Reportedly We are looking for as much as $ 4.8 billion in funding. The company said in March that it expects annual sales to exceed $ 500 million.

State regulators say BlockFi offered its BlockFi Interest Account (BIA) a “attractive” annual interest rate (up to 8.6%, according to Texas filing) in exchange for deposits in cryptocurrencies such as Bitcoin and Ethereum. Said. As of March 31, the deposit amount was “$ 14.7 billion worth”, according to New Jersey officials.

“Then, we will pool these cryptocurrencies to fund our lending and proprietary trading,” according to a New Jersey filing. “BlockFi is free to use what it thinks is appropriate, including mixing it with other BIA investors’ cryptocurrencies,” he added.

Richard Levin, chair of FinTech and regulatory practice at law firm Nelson Malins, said the case could be a bell for federal regulatory scrutiny.

“New Jersey, Texas, etc. may very well argue that this looks like a product that is some precedent-based security that applies to certain types of debt certificates,” Levin said. rice field.

Texas regulators have defined in their filings that state law “widely” includes securities as “traditional commodities such as stocks and bonds” as well as “investment contracts, notes, and evidence of debt.” Said that.

These “wide categories of products” “acquire an infinite number of unique and innovative investment schemes that are continuously introduced to the market,” said Texas Filing.

Regulators in three U.S. states are approaching BlockFi’s crypto account

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