BlockFi in hot water with regulators over crypto lending product

Cryptocurrency exchange BlockFi is in the crosshairs of the Securities and Exchange Commission (SEC) over a product that pays high interest rates for lending out their digital tokens.

Why should we care?
The SEC’s review of the BlockFi crypto lending product focuses on whether it is a security that needs to be registered with the regulator. BlockFi’s crypto lending product boasts annual yields as high as 9.5%. It’s unclear whether the SEC review will result in enforcement actions or accusations of wrongdoing. The SEC has been railing against offerings from crypto firms that it believes should be registered and subject to stronger oversight. BlockFi has also faced the wrath of state regulators: New Jersey and Texas have taken action against BlockFi, and other state regulators (Texas, Alabama, and Vermont) are asking BlockFi why its lending product shouldn’t be banned. BlockFi, for its part, says it’s in “active dialogue” with regulators as the company continues to enhance its reach. BlockFi currently has 500,000 retail accounts and is reportedly valued at more than $4B.