New Jersey Regulators Extend Enforcement on BlockFi BIA Ban to December 1st
The enforcement of the cease-and-desist order on BlockFi's Interest Accounts (BIAs) has been postponed yet again by the New Jersey Bureau of Securities (NJ BOS). This marks the third extension of the enforcement of the ban on BIA.
Third Extension Since July
The cease-and-desist order, which was issued in early July by the New Jersey regulator, and was scheduled to come into effect on July 22. The state regulator frowned at BlockFi’s BIAs, stating that it was an “unregulated” security under the New Jersey Securities Law.
However, the order was delayed to Sept 2 with a further extension putting it on Sept. 30.
Meanwhile, the government agency has once again postponed the enforcement of the order to Dec. 1, per reports from BlockFi with the crypto company saying they are still in dialogue with the regulator.
BlockFi has insisted that its services are “lawful and appropriate for crypto market participants.” The crypto company made this known despite not being insured by either the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC), or any US regulator.
The securities arm in New Jersey had taken offense at the blockchain company’s floating of the interest-yielding accounts without requisite approval and informed the company to stop onboarding new customers.
As BlockFi explained in the past, the order doesn't affect existing BIA customers.
Meanwhile, the NJ BOS is not the only regulator looking to pick a bone with BlockFi. Regulators from Texas, Alabama, Vermont, and Kentucky have also red-flagged the BIA initiative, with BlockFi still noting that its services were lawful and do not fall under the securities definition.
Interest-Yielding Accounts Not Accepted
Despite regulatory fogginess, the crypto scene in the US is at an all-time high as investors search for channels to increase their wealth in the aftermath of the global pandemic.
Also, inflation concerns have seen institutional investors like MicroStrategy add deflationary virtual currencies like Bitcoin to their balance book.
Meanwhile, mainstream adoption of cryptocurrencies is still way behind, with crypto companies looking to bolster the growth of the nascent industry. Given this, interest yields and return on investments (ROI) are unusually high, with BIA averaging 7.5% annual percentage yield (APY) on staked digital assets.
However, regulators have taken offense at this and are looking to quell the move. Like BlockFi, crypto-lender Celsius is facing a similar fate after receiving cease-and-desist orders from the NJBOS and the Texas State Securities Board (TSSB).
Top US crypto exchange Coinbase has also seen its “Lend” offering shut down after the US Securities and Exchange Commission (SEC) threatened to open legal proceedings against the publicly-listed company.