Regulation finance

With $100 Million Settlement Confirmed, BlockFi Aims to Register Yield with SEC


The Securities and Exchange Commission announced Monday that it fined crypto lending firm BlockFi $100 million, and now the firm plans to register with the agency to offer clients its popular high-yield crypto savings product.

As a condition of a $100 million settlement with the SEC as well as state securities regulators, the firm has announced plans to file an S1 to offer BlockFi Yield to US investors as a security.

“We intend for BlockFi Yield to be a new, SEC-registered crypto interest-bearing security, which will allow clients to earn interest on their crypto assets,” BlockFi CEO Zac Prince said in a press release.

Bloomberg reported on Friday that the firm would have to discontinue its high-yield account for customers in the US, but this news suggests the company will offer the product under a new name and with the blessings of regulators. 

SEC Chair Gary Gensler, in the agency’s announcement of the settlement, said “This is the first case of its kind with respect to crypto lending platforms. Today’s settlement makes clear that crypto markets must comply with time-tested securities laws.”

In the meantime, BlockFi says that existing US clients will be able to earn interest in their existing accounts but won’t be able to add more assets. Non-US users are unaffected.

While US bank savings accounts are not subject to securities laws, they are required to offer FDIC insurance. Crypto lending platforms like BlockFi have generally compared themselves to bank accounts offering returns of up to 8%, as compared to sub-1% returns in traditional savings account. They have, however, not had FDIC insurance, which has rankled regulators like the SEC, who call these investment products akin to a mutual fund or other financial product. 

Starting last summer, a series of state securities regulators filed actions against BlockFi, which is one of the largest such yield platforms in the country. Around the same time, the federal SEC shut down Coinbase’s attempt to launch its own yield offering. Coinbase CEO Brian Armstrong lashed out at the SEC on Twitter over the commission’s decision and opacity in its decision making. CRYPTOCASTER® - DECENTRALIZED FREEDOM!

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