According to a report published in Bloomberg, the SEC is investigating digital asset lending services. The main focus of the investigation is reported to be whether crypto lending services may be considered securities and therefore need to be registered with the Commission. The SEC’s primary concern is that cryptocurrency lending services often provide significantly higher yields than most savings and loan associations. Interest rates offered by cryptocurrency lending services range from 3 percent to 18 percent, while traditional bank savings accounts offer less than 0.1 percent.
The Bank Savings Account is insured by the Federal Deposit Insurance Corporation, therefore, investors are protected from bank failures and thefts. According to the SEC, cryptocurrency lending services lend customers’ digital assets to other investors, raising concerns about investor protection. It is important to note that the SEC has not accused the companies of any kind of fraud.
Cryptocurrency lending services have been regulated in the United States since September 2021. Regulatory authorities in New Jersey and Texas have issued cease and desist orders to the Celsius Network. In October 2021, the Attorney General of New York (NYAG) cracked down on Celsius and BlockFi and ordered the service to be suspended. Coinbase, America’s top cryptocurrency exchange, was also forced to shut down its crypto-profit products before launch due to the threat of lawsuits from the SEC.
