SEC Warns Against Interest-Bearing Crypto Accounts — Says They’re Riskier Than Bank Deposits

The U.S. Securities and Exchange Commission (SEC) has warned investors astir the “risks with accounts that wage involvement connected crypto-asset deposits.” The informing coincides with the archetypal enforcement enactment the bureau took against crypto lending platforms.

SEC Warns About Risks successful Interest-Bearing Crypto Accounts

The U.S. Securities and Exchange Commission’s Office of Investor Education and Advocacy and the Division of Enforcement’s Retail Strategy Task Force announced Monday that they person jointly issued an capitalist bulletin “to amended investors astir risks with accounts that wage involvement connected crypto-asset deposits.”

On the aforesaid day, the SEC announced that it has charged cryptocurrency lending level Blockfi for failing to registry its crypto lending product. Blockfi has agreed to wage $100 cardinal successful penalties to settee the charges with the SEC and 32 authorities regulators.

The SEC explained that “an interest-bearing relationship for crypto plus holdings … are not arsenic harmless arsenic slope oregon recognition national deposits.”

The securities watchdog noted that banks and recognition unions are regulated by some national and authorities banking regulators. In addition, deposits astatine banks oregon national recognition unions are insured by the Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA). Similarly, securities accounts held with U.S.-registered brokers whitethorn besides beryllium insured by the Securities Investor Protection Corporation (SIPC).

The SEC warned:

Companies offering interest-bearing accounts for crypto assets bash not supply investors with the aforesaid protections arsenic bash banks oregon recognition unions, and crypto assets sent to those companies are not presently insured.

Crypto assets held successful an interest-bearing relationship whitethorn beryllium utilized to put successful assorted crypto products oregon activities, including lending programs successful which the crypto assets are loaned to borrowers, the SEC described, adding that “The involvement being paid to you is based connected these concern activities.”

The bureau past outlined the risks these activities are taxable to, including volatility and liquidity successful the crypto markets, the institution holding your crypto assets whitethorn spell bankrupt, changes successful regulation, imaginable fraud, method glitches, information breaches, and malware.

What bash you deliberation astir the SEC informing against interest-bearing crypto accounts? Let america cognize successful the comments conception below.

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