The regulatory walls have been closing down quickly for BlockFi, and now, it has been ordered to cease offering its unregistered products in at least four U.S. states. First was New Jersey, which ordered the company to cease offering its interest-bearing accounts by July 22. However, as BlockFi now reveals, the New Jersey watchdog has given it one more month before it gets booted out.
On July 19, the New Jersey Bureau of Securities issued an order to BlockFi, ordering it to cease offering services that violate the existing securities laws. Of particular focus for the watchdog was the BlockFi Interest Account in which users deposit digital currencies and earn interest. Being based in New Jersey, the regulatory action on BlockFi was of significant importance to its future in the U.S. It didn’t help that the watchdog ordered it to cease offering its services by July 22.
When it rains, it pours, and for BlockFi, the New Jersey action kicked off a number of regulators immediately taking similar action. Texas would file a cease-and-desist order against the company days later, with Alabama following suit. The latest to join in the BlockFi bashing was Vermont which did so over the weekend.
And now, BlockFi has received some slight reprieve from the New Jersey regulator. Co-founder and CEO Zac Prince confirmed that the NJ watchdog has given the firm one more month before it has to shut down its interest-bearing accounts.
In a blog post on the company’s current legal issues, Prince told BlockFi users, “One update I want to share with you following these discussions is that the New Jersey Bureau of Securities (NJ BOS) has further postponed the effective date of its previous order to Thursday, September 2, 2021.”
Prince also sought to reassure users that the NJ watchdog’s actions only apply to the creation of new interest-bearing accounts (BIAs). “…, it has no impact on current BIA clients or any of our other products. Rest assured, your access to BlockFi is completely unimpaired,” he wrote.
Prince further pointed out that BlockFi has been engaging with regulators on the state of the products it offers. He believes that ultimately, the current legal woes will give the company an opportunity to “help define the regulatory environment for our ecosystem.”
He added, “This is our commitment to you — to fight for your rights to earn interest on your crypto assets.”
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