Crypto lending firm Celsius Network has announced that it will launch a custody solution for US-based users in response to discussions with local regulators.
In an announcement Monday, Celsius said its “Earn” product, which allows users to earn interest on cryptocurrencies, will not be available to US residents making transfers beginning April 15. According to the firm, any currency transferred to interest-earning accounts before Friday “will continue to earn rewards,” but “new transfers made by non-accredited investors in the United States” will be held in escrow accounts.
Only “verified accredited investors” in the United States will be able to add coins to their earnings accounts, while users outside of the country will not be affected. Celsius said the changes to its products were the result of “ongoing discussions with US regulators.” In 2021, some state-level regulators moved forward with cease and desist orders against the platform for allegedly offering unlicensed securities with its interest-earning accounts.
“Our industry is going through a paradigm shift,” said Celsius CEO and founder Alex Mashinsky. “In line with recent regulatory guidance, there will be changes to how our Earn product will work for US-based users.”
To be clear, for all existing US users – accredited and non-accredited, all coins currently in your account will continue to earn rewards for as long as they remain in your Earn account starting April 15, 2022. https://t.co /Ya9hmOIcZh
— Alex Mashinsky (@Mashinsky) April 12, 2022
To be clear, for all existing US users – accredited and non-accredited – all coins currently in your account will continue to earn rewards as long as they remain in your Earn account as of April 15, 2022.
Celsius Earn accounts were the subject of a hearing announced by the Texas State Securities Board in September 2021, as well as a cease and desist order from the New Jersey Securities Bureau related to “the sale of securities not registered.” Had regulators at the state or federal level gone ahead with enforcement actions against the lending platform, Celsius Network and its affiliates Celsius Network Limited, Celsius US Holding and Celsius Lending would likely have been affected.
According to the platform, Celsius has approximately $23 billion in assets under management as of April 1 and has paid out more than $912 million in returns and rewards since 2018. Rates on the lending firm’s interest-bearing product are up to 18.63% APY for cryptocurrencies, with returns of 7.1% on many stablecoins.
US regulators have also moved against cryptocurrency lending platform BlockFi, with the New Jersey Securities Bureau and the Texas State Securities Board announcing similar enforcement actions in July 2021. The New York Attorney General’s Office made accusations of offering unregistered services against the loan firm Nexo Financial in October. Nexo denied involvement at the time, saying it did not offer its “Earn and Exchange product” to New York residents.
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