Vermont becomes the Fourth US State to raise regulatory concerns about the crypto lending company, BlockFi.
Block-Fi, a well-known crypto lending company, has recently been in hot water with regulators due to its interest account (BIA) services.
Within a week, the crypto platform will face a review over the legality of BIA from the fourth state in the United States. According to the company’s website, the Vermont Securities Commission is investigating whether BIA qualifies as a security and, as such, must be registered with the security’s office before being issued.
The interest accounts are not protected by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC), according to Blockfi’s website (SIPC).
These accounts are also not registered with any federal or state securities regulatory authority because they do not consider them to be securities.
On July 19, the New Jersey Bureau of Securities issued a cease and desist notice to BlockFi, alleging that BIA is an unregistered security under New Jersey’s securities regulations.
Security regulators in Florida and Alabama, in addition to New Jersey and Vermont, are looking into the legality of BIA in their states.
BlockFi claims that their BIA product is not a security and, as such, should not be regulated as such. According to the crypto platform,
“We are in active dialogue with multiple regulators to demonstrate that the BIA is not a security and should not be regulated as one. We firmly believe that the BIA is lawful and appropriate for crypto market participants, and we remain steadfast in our commitment to fight for consumers’ rights to earn interest on their crypto assets.”
The interest account at BlockFi pays compound interest on cryptocurrencies ranging from 3% to 8.6%. The program has gained a lot of traction in the US market, which has enabled the crypto platform to raise $350 million in funding, giving it a $3 billion valuation. Despite the looming regulatory issues, BlockFi confirmed its ambitions to go public.