According to Bloomberg, a crypto lender called Nexo has ceased paying interest on new deposits and is planning to launch a new product.
According to the report, this follows a recent settlement with BlockFi by the US Securities and Exchange Commission (SEC) over a similar product.
As per Pymnts.com, Nexo said it is making the changes willfully “in light of BlockFi’s agreement to pay $100 million to federal and state securities regulators to settle allegations that it illegally offered a product that pays customers high rates to lend out their digital tokens,” according to a statement posted to the company’s official subreddit on Friday.
According to reports, BlockFi will register its offers with the authority. Nexo will follow the same approach.
Customers Will Earn Interest on Existing Digital Assets
Current Nexo customers in the United States will not be able to earn interest on new deposits, but they will be able to earn interest on their existing digital asset balances. New customers will be unable to use the product at all.
According to the statement, the firm will make a new offering accessible that is compliant with securities laws, and the adjustments will be in effect “until the restructuring of the Earn Interest Product and the registration process with the relevant regulatory bodies are finalized.”
However, they conveniently overlook the part of Wall Street’s guidance that bitcoin should account for “up to 5% of your portfolio.”
This is a conundrum for crypto investors, according to PYMNTS: With so much volatility, timing is more crucial than with traditional investments.
There’s also the abundance of complicated instruments like options and futures, which come with the risk of margin trading.