The New Jersey Bureau of Securities has extended BlockFi’s deadline to cease offering interest-bearing accounts in the state.
State regulators have a lot of questions for crypto lender BlockFi. It simply bought some more time to address some of them.
According to BlockFi CEO Zac Prince, the New Jersey Bureau of Securities has extended the deadline for the state’s BlockFi Interest Account (BIA) to September 2.
On July 19, the state’s attorney general issued a cease and desist letter to the company, demanding that new BIAs, which promise up to 7.5 percent annual returns on deposited crypto, cease by July 22.
Acting Attorney General Andrew J Bruck stated at the time, “Our rules are simple: if you sell securities in New Jersey, you must comply with New Jersey’s securities laws.”
This was the first in a series of actions taken by state securities regulators against the fledgeling lender. Alabama, Texas, and, just this weekend, Vermont joined New Jersey.
In a blog post today, Prince spun it as potentially good news: “We’ve said time and again that the key to our industry’s success is appropriate regulation. Ultimately, we see this as an opportunity for BlockFi to help define the regulatory environment for our ecosystem.”
Whereas much of the debate over cryptocurrency regulations revolves around whether certain digital assets are unregistered securities, state securities regulators are preparing to argue that the BIA product itself is an unregistered security offering, or an investment contract that has not been vetted by the Securities and Exchange Commission or their state-level counterparts.
In a July 22 cease and desist letter, the Texas State Securities Board stated simply: “They have not registered with the Texas State Securities Board to offer or sell securities in Texas, as required by Section 12 of the Securities Act, and the BIAs have not registered or are not permitted to sell in Texas, as required by Section 7 of the Securities Act. As a result, Respondents are breaking laws intended to protect Texans.”
BlockFi Interest Account accepts a number of stablecoins, such as Tether and Gemini USD, as well as Bitcoin, Litecoin, and other crypto assets.
Today, Prince vowed to “fight for your rights to earn interest on your cryptocurrency assets.”