Alabama, Texas, and New Jersey have independent state regulators that are bringing their concerns regarding the BlockFi (a decentralized finance company based in New Jersey) as stating that it offers unregistered securities. The specific target of the regulators is the interest account of BlockFi (BIA), offering rates that the clients are habitual of in the DeFi however, these rates are much different than the traditional banking.
The unique trio
The broader adoption of crypto and its regulation are the subjects that have been frequently discussed across the news, and currently, they are considered as the burning topics. Particularly the activities of three states against BlockFi are uncommon. The native state of the company, New Jersey, is an autonomous state having an aggressive attitude as compared to the other two. Recently, a letter has been sent by the Securities Bureau of the state ordering BlockFi to halt its BIA offerings to target the citizens of the state before the 29th of July.
Texas, a state which is conventionally led by the Republicans, has also sent a similar document that mentions the hearing date to occur in October. The document also notes that the firm is illegitimately funding its proprietary trading and loaning operations through selling unregistered securities as the interest-earning accounts of cryptocurrencies.
Over and above, Alabama (another state usually controlled by Republicans) has also announced a show-cause notice for the organization mentioning that a period of less than a month would be provided to the organization to justify why it should not be given a letter for stopping its procedural activities for trading unregistered securities. The document suggests that the firm should register its BIAs with the state’s approved securities regulators.
Is DeFi under misfortune?
A recent replying statement by BlockFi has been posted by it by a tweet stating that the firm completely believed its BIAs to be appropriate and lawful for being the participants of the crypto market. It further added that the discussion with regulators would be appreciated by the company and the adequate regulation of the crypto industry is most significant for future success.
It is hard to pronounce any possible outcomes of such forceful regulatory attacks at this early stage as, despite the other prominent companies, BlockFi is being targeted by the enforcement actions. It is also not yet clear whether the other competitors of the company, such as Celsius and Nexo, will face a similar prosecution.