SEC Forewarns Counter Benefiting Crypto Accounts — Says They're Riskier as Compared to Bank Deposits

SEC Cautions About Risks Linked with Interest-Bearing Crypto Accounts

On Monday, the US Securities declared about the risks associated with a crypto investor account. This announcement was to inform the investors about risks with accounts that pay interest on crypto-asset deposits. On Monday itself, the SEC further announced that it has invoiced cryptocurrency lending platform Blockfi for failing to make a record of its crypto lending service. Blockfi has said 'yes' to reimburse $100 million as a penalty amount. Blockfi has agreed to settle the charges with the SEC and 32 state regulators.

The SEC clarified that 'a benefiting crypto account with high yielding interest asset holdings is unsafe; because of bank or credit union deposits.' Lately, the securities watchdog recognized banks and credit alliances being controlled by both federal and state banking actuators. Moreover, deposits at banks or federal credit unions are financed by the Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA). 

Alert Issued By SEC 

Firms that provide interest-bearing accounts for crypto-assets do not offer the investors security. The required security is availed by the banks or credit unions. Also, the crypto assets consigned to those companies aren't insured. Crypto assets within an interest-bearing account are expected to be used for funding in several crypto products or activities. This will count in lending programs where the crypto assets are offered as a loan to the borrowers.