- Nexo is gradually ceasing United States operations due to unclear regulations.
- The crypto lender accused the agency of failing to provide a clearer path forward in fostering blockchain businesses.
- The company said it has already off-boarded its customers from New York and Vermont and has halted its ongoing registrations.
- The firm is ceasing access to its Earn Interest Product in eight other states.
- This update follows the crypto lender’s approval to operate in Italy as a virtual currency operator.
Renowned crypto lending firm Nexo has resolved to gradually halt its operations in the United States, as announced in its latest blog post.
Today we are announcing the regrettable but necessary decision that Nexo will be phasing out its products and services in the United States due to a lack of regulatory clarity. 🧵— Nexo (@Nexo) December 5, 2022
In the post, Nexo cited the lack of regulatory clarity as the reason for its “regrettable” but “necessary” decision.
"Today, we are announcing the regrettable but necessary decision that Nexo will be phasing out its products and services in the United States due to a lack of regulatory clarity," the firm stated.
Over 18 months of negotiations with the US regulator, the crypto lender failed to adhere to existing financial laws. It accused the agency of failing to provide a clearer path forward to foster blockchain businesses in the country.
Nexo Off-Boards its Customers in New York and Vermont
Occasioned by this development, Nexo said it has already off-boarded its customers from New York and Vermont. Further, the lending firm halted its ongoing registrations in the United States, particularly for its Earn Interest Product. The company plans to halt accessibility to this product in eight other states today.
"As of December 6, 2022, our Earn Interest Product will not be available for existing clients in eight additional US states - Indiana, Kentucky, Maryland, Oklahoma, South Carolina, Wisconsin, California, and Washington,” the firm stated.
However, it promised to allow customers in other states to continue to access the product.
Moreover, the company clarified that all active fixed terms would be automatically unlocked on December 6 without penalty, and all interest accrued until the same date will be credited to users’ savings wallets.
This development comes a few days after the crypto lender obtained regulatory approval to operate as a virtual currency operator in Italy. Issued by the Organismo Agenti e Mediatori (OAM), the approval allows Nexo to offer issuance, transfers, and exchange of virtual currencies and digital asset wallet services in the country.
Meanwhile, in its announcement, the crypto lender said the offering of these services would comply with the regulatory framework in Italy.
On the Flipside
- Although Nexo claims it is closing its business because of unclear regulations, the Department of Financial Protection and Innovation (DFPI) claimed the company offered its Earn Interest Product account to California residents without registering it as a security.
Why You Should Care
Arguably, the recent closure of the crypto firm is a result of strict regulation by US authorities. The ongoing case between Ripple Inc. and the SEC can be taken as yet another example.