Nexo Crypto Lending Platform To Cease US Operations

Lending platforms have struggled to achieve regulatory clarity in the US, and Nexo has had enough

article-image

Karnoff/Shutterstock.com

share

Nexo, a digital assets platform which offers lending services and an exchange, said it will gradually phase out US operations as a direct result of a “dead end” in its attempts to gain clarity from US regulators.

In a statement, Nexo claimed it had engaged in “more than 18 months of good-faith dialogue with US state and federal regulators” — but, despite “rhetoric to the contrary,” it could not reassure customers that “regulators are focused on their best interests.”

Starting Tuesday, the company added, its flagship interest-bearing investment products will no longer be available to existing clients in eight more states: Indiana, Kentucky, Maryland, Oklahoma, South Carolina, Wisconsin, California and Washington. The yield-bearing offering had already ceased operations in New York and Vermont.

Lending platforms in the US have been under scrutiny by state regulators, especially following the collapse of Celsius and Voyager. When Coinbase attempted to launch a lending program in 2021, the SEC issued a Wells notice — which informs the recipient that it intends to sue in court. Coinbase subsequently abandoned the Lend effort, with a terse note explaining the SEC decision: “We don’t know why.”

Nexo noted in its update that it took a variety of actions over the last couple of years to attempt to stay in compliance with US regulations, including registering its token sale with the SEC, exiting New York markets, and refusing new funds from US customers into its Earn Interest product when BlockFi — another crypto lender that recently sought bankruptcy protection — was ordered to undertake similar action, in February 2022.

Multiple crypto companies and mainstream finance stalwarts have expressed their frustration that US regulations remain unclear. At Money20/20 in October 2022 , May Zabaneh — the VP of PayPal’s blockchain and cryptocurrency division — said that “There has to be some clarity that comes out, some standards, some ideas of the dos and the don’ts and some structure around it… otherwise that mainstream adoption will really be inhibited.”

Brad Garlinghouse of Ripple told CNBC last year that although in “markets like Singapore and even parts of Korea where there really has been a thoughtful government-led effort to define and have clear regulatory frameworks around cryptocurrencies… Ironically, here in the United States they have not provided that same clarity.”

Paul Grewal, the Chief Legal Officer at Coinbase, explained in a blog post referencing their doomed Lend product that “After our initial meeting, we answered all of the SEC’s questions in writing and then again in person. But we didn’t get much of a response. The SEC told us they consider Lend to involve a security, but wouldn’t say why or how they’d reached that conclusion.”

Blockworks has reached out to Nexo for comment.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg

Research

In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.

article-image

BUZZ holds shares of Coinbase, Robinhood and MicroStrategy

article-image

Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile

article-image

The results mark “a major positive inflection point,” one analyst says, as the exchange carries net income momentum into a crypto rally

article-image

While the slate of 10 US spot bitcoin funds have tallied $4.6 billion of net inflows thus far, half of the field is lagging the leaders

article-image

Trading volumes totalled $154 billion in Q4, including $125 billion in institutional volume

article-image

DeFi on Bitcoin is all the rage right now and Stacks is positioned to benefit