In a settlement with regulators, BlockFi agreed to register with the SEC and pay $100M in federal and state fines. It plans to launch an SEC-approved crypto interest-bearing security.

Why should we care?
BlockFi’s settlement may be the first sign of a coming regulatory tidal wave. In his statement on the agreement, SEC Chair Gary Gensler said the news “makes clear that crypto markets must comply with time-tested securities laws,” and also proved “the commission’s willingness to work with crypto platforms to determine how they can come into compliance with those laws.” The SEC also flagged the fact that crypto-interest accounts aren’t federally insured as another source of concern. Both declarations suggest that the SEC will increasingly treat crypto-based services as it would traditional financial institutions. While this renders crypto-interest accounts less alluring than they once were—and departs from DeFi’s libertarian ethos—agreements with state regulators will protect consumers in the long run through federal assurances, and may convert more risk-averse users to crypto-based services as well.