Nexo announced plans to discontinue its Earn Interest product citing an investigation by the Federal Bureau of Consumer Financial Protection.
On Monday, December 5, cryptocurrency lender Nexo announced plans to phase out its products and services from the US, citing a regulatory โdead end.โ Calling it "regrettable," Nexo said the decision comes amid its recent clashes with regulators.
Nexo said they have been in dialogue with US state and federal regulators over the past 18 months. However, the โinconsistent and changing positions between state and federal regulatorsโ did not lead to a proper conclusion.
The crypto lender also took issue with US regulators for failing to provide a clear path to enable blockchain businesses. Crypto lenders like Nexo act like banks in the crypto space. They offer their clients interest on digital currency deposits with the platform.
As we know, crypto lenders have been facing big problems during the crypto winter of 2022. Some major crypto lenders such as Voyager Digital and Celsius Network have announced bankruptcies this year after failing to meet their clients' demand for liquidity.
Nexo will discontinue its earned interest product
The crypto lender also announced that as of today, December 6, it will be discontinuing its Earn Interest product citing an investigation by the federal Bureau of Consumer Financial Protection. In their announcement, Nexo noted:
โThis was made abundantly clear by the CFPBโs decision last Thursday to insist that it has jurisdiction to investigate our earned interest product, which the SEC and state regulators have simultaneously insisted that it is a security subject to their jurisdictionsโ.
Last Thursday, the CFPB rejected a request by Nexo to halt its investigation into the matter. The crypto leader had argued that only securities regulators have jurisdiction over him. โIn addition, several of the state securities regulators with whom we had been cooperating for several months surprised us by bringing actions against us without prior notice.โ additional Nexus.
The California Department of Financial Protection and Innovation said Nexo's interest-bearing products promised interest rates as high as 36%. However, Nexo defended its position by stating that it was only available for one product, adding that it did not advertise the high fee.
As the company plans to withdraw from the United States, the crypto lender said it would still process withdrawals in โreal time.โ It also has a large part of its operations in Bulgaria.
While peers like BlockFi, Celsius, and Voyager announced bankruptcy this year, Nexo still managed to stay afloat.
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Bhushan is a FinTech enthusiast and has a good knack for understanding financial markets. His interest in economics and finance draws his attention to the new emerging markets of Blockchain Technology and Cryptocurrencies. He is continuously in a learning process and stays motivated by sharing the knowledge he has acquired. In his spare time, he reads thrillers and sometimes explores his culinary skills.
