Many cryptocurrency lending firms in the US are considering limiting their offerings to avoid legal battles with the US Securities and Exchange Commission, Reuters reports, citing Richard Levin, head of regulation practice at Nelson Mullins. BlockFi, one of the big players on the market, is planning to offer an alternative yield product, which is expected to eventually become a standard for other companies:
"Our resolution with the SEC is a key step to achieving regulatory clarity for not only BlockFi but the crypto ecosystem as a whole, which is necessary for long-term mass adoption of crypto financial services," a BlockFi spokesperson said.
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However, some crypto companies are still not sure if they should proceed with lending plans as the SEC still hasn't provided any clarity on the matter. Kraken, which initially wanted to offer an interest-bearing services, is now doubting about the move as the SEC has not provided guidance, said Marco Santori, Kraken Chief Legal Officer. Other cryptocurrency exchange, Bitstamp, wants to offer a yield product, but only to US institutional investors.
Earlier, iHodl reported that the SEC is going to require publicly traded cryptocurrency trading firms and custodians to report clients' cryptocurrencies as assets and their obligation to the clients as liabilities. Previously, crypto firms could disclose the total value of clients' assets apart from their own balance sheets.
This is how many brokers work today because of legal precedent that has established that, in case of bankruptcy, the assets on balance sheets also belong to the clients. But this time, however, the SEC believes that this law does not work properly with crypto.
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