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 about the “risks with accounts that pay interest on crypto-asset deposits.” The warning coincides with the first enforcement action the agency took against crypto lending platforms. SEC Warns About Risks in 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 have jointly issued an investor bulletin “to educate investors about risks with accounts that pay interest on crypto-asset deposits.”
On the same day, the SEC announced that it has charged cryptocurrency lending platform Blockfi for failing to register its crypto lending product. Blockfi has agreed to pay $100 million in penalties to settle the charges with the SEC and 32 state regulators.
The SEC explained that “an interest-bearing account for crypto asset holdings … are not as safe as bank or credit union deposits.”
The securities watchdog noted that banks and credit unions are regulated by both federal and state banking regulators. In addition, deposits at banks or federal credit 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 may also be insured by the Securities Investor Protection Corporation (SIPC).
The SEC warned: Companies offering interest-bearing accounts for crypto assets do not provide investors with the same protections as do banks or credit unions, and crypto assets sent to those companies are not currently insured.
Crypto assets held in an interest-bearing account may be used to invest in various crypto products or activities, including lending programs in which the crypto assets are loaned to borrowers, the SEC described, adding that “The interest being paid to you is based on these investment activities.”
The agency then outlined the risks these activities are subject to, including volatility and liquidity in the crypto markets, the company holding your crypto assets may go bankrupt, changes in regulation, potential fraud, technical glitches, security breaches, and malware. Tags in this story Blockfi, crypto deposits, cryptocurrency accounts, interest bearing in cryptocurrency accounts, interest crypto accounts, interest-bearing crypto accounts, SEC
What do you think about the SEC warning against interest-bearing crypto accounts? Let us know in the comments section below. Kevin Helms
A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography. President Lukashenko Signs Decree to Create Crypto Wallet Register in Belarus REGULATION | 2 hours ago Trudeau Invokes Emergencies Act to End Freedom Convoy Protests — Canada"s Terrorist Financing Rules Now Cover Crypto REGULATION | 13 hours ago
Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleSoutheast Asia’s Largest Bank DBS to Launch Crypto Trading for Retail Investors Next articleReport Attributes Large Share of Global Crypto Crime to Russia, Moscow City Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItFarmville Creator Zynga to Launch NFT Games, Says Gaming Firm"s Blockchain Lead
American social game developer Zynga has plans to launch non-fungible token (NFT) games in the near future. Zynga’s vice president of blockchain, Matt Wolf, told the press that the company is looking at the cycle right now and “figuring out ... read more.PUBG Developer Parent Company Krafton to Work On NFT and Metaverse Related Projects McDonald’s Trademark Filings Hint at Fast Food Giant"s Intent to Produce Metaverse Restaurants Fintech Specialists Predict Ethereum Price Hitting $6,500 This Year Before Rising to $26,338 by 2030 Fitch Ratings Downgrades El Salvador Deeper Into Junk Status Citing Bitcoin Risks