US regulators are making it clear crypto companies must follow conventional rules. Crypto lender BlockFi has settled with the Securities and Exchange Commission over charges the company allegedly offered interest accounts without registering them under the Securities Act. The company will pay $100 million in penalties, including $50 million to settle charges from 32 states.
BlockFi has also agreed to register for the sale of a new product, Yield, and has promised to comply with SEC rules in the next 60 days. The company was reportedly selling unregistered crypto interest accounts from March 2019 until today, and made “false and misleading” claims about the risks from lending.
In a blog post, BlockFi cast the settlement as a form of victory. The company saw this as providing “increased regulatory clarity” that helped it and the industry move forward. US-based customers of its internet accounts won’t be allowed to add new assets until BlockFi Yield is registered, at which point their accounts will switch over.
The charges and settlement are the SEC’s first levelled against a crypto lender, and reflect a clear goal: the Commission is willing to accept these services as long as they honor rules deemed applicable. The move also comes in sync with a broader effort by American officials to clarify the legal status of crypto assets. BlockFi’s fate, in that regard, might help other crypto businesses start on a better footing.