New Jersey delays effective date of cease-and-desist order for BlockFi until December

Sep 22, 2021 | The Block News | 0 comments

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A New Jersey cease-and-desist for new interest accounts at crypto lender BlockFi will take effect on December 1, per an extension that the firm announced on Wednesday.  

The New Jersey Bureau of Securities signed off on this third extension of its cease-and-desist order, according to BlockFi. The securities regulator initially issued its order back in July, the first of a range of state regulators to target the New Jersey-based firm over its offerings. Without backing from the FDIC, BlockFi’s interest accounts fall under the definition of a security, argue the regulators. 

“The order, which calls for preventing the creation of all new [BlockFi Interest Accounts], is not presently in effect and therefore has no impact on our current BIA clients or any of our other products. All existing BIA clients, in New Jersey and worldwide, continue to have access to their accounts. All other products, services and assets on the BlockFi platform are unaffected,” the firm said Wednesday. 

The issue of crypto lending and interest accounts has subsequently ballooned. New Jersey, Texas and Alabama recently began similar proceedings against BlockFi competitor Celsius. 

At the federal level, the Securities and Exchange Commission has been less active, but interactions between the SEC and crypto exchange Coinbase seem to have put an end to the latter’s nascent Lend offering, which would have paid interest out on USDC holdings. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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