Crypto lending firm Celsius Network has announced it will be launching a custody solution for users based in the United States in response to discussions with local regulators.
In a Monday announcement, Celsius said its Earn product, which allows users to earn interest on crypto, would be unavailable to U.S. residents making transfers starting on Friday. According to the firm, any coins 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 custody accounts.
Only “verified accredited investors” in the U.S. will be able to add coins to their Earn accounts, while users outside the country will be unaffected. Celsius said the changes to its products were the result of “ongoing discussions with United States 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 the way our Earn product will work for users based in the United States.”
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
Celsius’s 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 Bureau of Securities related to “the sale of unregistered securities.” Should regulators at the state or federal levels have moved forward 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 roughly $23 billion in assets under management as of April 1 and paid out more than $912 million in yield and rewards since 2018. The rates for the lending firm’s interest-earning product are up to 18.63% APY for cryptocurrencies, with 7.1% returns on many stablecoins.
U.S. regulators have also moved against crypto lending platform BlockFi, with the New Jersey Bureau of Securities and Texas State Securities Board announcing similar enforcement actions in July 2021. The Office of the Attorney General of New York made allegations of offering unregistered services against lending firm Nexo Financial in October. Nexo denied involvement at the time, saying it did not offer its Earn Product and Exchange for New York residents.
Source: Cointelegraph
