Nexo terminating interest payment on the new saving wallets top up
market, Nexo, which is also a competitor of BlockFi has announced about
terminating interest payment claiming that customers from the U.S. henceforth will
not be allowed to earn interest on new savings wallet top-ups. Although U.S.
citizens can earn interest on their current savings wallet balances that are
held before this announcement.
Prior to this, U.S. Securities and Exchange Commission (SEC) charged the crypto lending platform Blockfi that the platform has failed to register its retail crypto lending product. A fine of $100 million in penalties was imposed on the company. For this news Blockfi received warnings regarding the firm’s interest-bearing accounts from many regulators from a myriad of states like New Jersey, Kentucky, Texas, Alabama, and Vermont. In some states, the company had to stop offering Blockfi Interest Accounts (BIAs) by a particular date because of cease-and-desist orders. Finally, to make settlement with the US securities regulator BlockFi’s had to pay the amount.
After which Nexo announced to change the terms for its US customers for its interest-bearing crypto products. According to new changes, Nexo customers will continue to earn interest on the existing savings wallet balances, but they will not receive any interest on new top-ups to their savings wallet. These changes are only applicable to the company’s clients in the United States. It has further confirmed that customers outside from U.S will continue to receive interest on their crypto deposits as per the existing terms for them.
A moderator of the official subreddit of Nexo posted “New top-ups to your Savings Wallet as of today will not earn interest until the restructuring of the Earn Interest Product and the registration process with the relevant regulatory bodies are finalized, as per the recently announced guidance,”.
As per both federal and state US regulators, crypto interest accounts are not following existing securities market law. Several state regulators have launched investigations into crypto lenders, and some have even issued cease-and-desist orders. Multiple platforms have been investigated by the SEC. Recent settlement of BlockFi with the SEC and other state regulators, made industry gain a lot of attention. In addition, the platform has stopped offering interest-bearing crypto accounts in the US.
CBW - External Analyst