Nexo Departing America Because of Regulatory Challenges
Unburdened by American Regulations, Nexo Bows Out
Crypto lending giant Nexo has packing its bags and cutting ties with the US after a grueling 18-month dance with state and federal regulators. Effective immediately, the company will gradually phase out its services within the nation's borders over the coming weeks.
Regulatory Rollercoaster
In a Monday announcement, Nexo firmly declared an end to its diplomatic efforts with US regulatory bodies. The firm's spokesperson blasted the inconsistent and ever-changing legal positions these entities have taken, starkly stating that they've decided "the US is unwilling to provide a proper path for blockchain businesses, and we can't guarantee our customers that regulators have their best interests at heart."
The legal heat stemmed primarily from Nexo's "Earn" product, a crypto savings depositor that yields a steady annual return on clients' assets. California regulation has already forced the firm to cease this controversial offering, labeling it as an unregistered security.
Over the past two years, Nexo has already jettisoned customers from New York and Vermont due to similar regulatory squeeze. Starting December 6, eight more states will follow suit, including Indiana, Kentucky, Maryland, Oklahoma, South Carolina, Wisconsin, California, and Washington, as Nexo's Earn product departs.
Remaining Nexo products will still be available in the short term, with the company assuring clients that withdrawals will continue to be processed.
Nexo Versus Regulators
The Securities and Exchange Commission (SEC) has been unapologetic in its scrutiny of crypto lending platforms, targetting Nexo's exorbitant returns as a red flag. Last year, the SEC denied Coinbase's similar product, criticizing murky standards for what qualifies as a security.
Nexo's response to the SEC's pressure mirrored that of Coinbase's CEO, Brian Armstrong, who slammed the agency for its unclear regulations. Following BlockFi's $100 million fine for its yield product in February 2022, Nexo immediately ceased accepting funds for its Earn product.
Amid this year's bear market, Nexo now stands as one of the last major crypto lending companies, from the ashes of firms like Celsius, Voyager, FTX and BlockFi which all filed for bankruptcy, Voyager included. Genesis Trading seems poised to join this grim picture.
DISCLAIMER: This article is for informational purposes only. No investment advice is intended.
Sources
- Nexo Faces Regulatory Scrutiny, to Withdraw from US Market
- Nexo Settles with SEC over Lending Product
- Nexo Responds to Californian Regulator's Order to Stop Earn Interest Product
- SEC's Clarification on Crypto Regulations
- Nexo, a crypto lending giant, has decided to leave the US after 18 months of tough negotiations with state and federal regulators.
- In a recent announcement, Nexo stated that they are no longer engaging with US regulatory bodies due to inconsistent and ever-changing legal positions.
- The firm's decision was primarily influenced by regulatory issues with their "Earn" product, which yields a steady annual return on clients' assets, and has already been labeled as an unregistered security in California.
- Starting December 6th, Nexo will cease its services in eight states, including California, due to regulatory pressure.
- Remaining Nexo products will still be available for a short term, with the company assuring clients that withdrawals will continue to be processed.
- The Securities and Exchange Commission (SEC) has been critical of crypto lending platforms, targeting Nexo's high returns as a red flag, much like they did with Coinbase's similar product last year.
