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- The Texas State Securities Board (TSSB) has issued a cease-and-desist order against BlockFi, claiming that its Interest Account (BIA) product is a security under Texas law
- The BIAs are investment contracts, notes, or pieces of evidence of indebtedness regulated as securities as specified by Section 4.A of the Securities Act, according to the TSSB
- BlockFi CEO Zac Prince rushed to Twitter to reassure existing BIA customers that the injunction will have no effect on them or any other BlockFi investments
The Texas State Securities Board (TSSB) has issued a cease-and-desist order against crypto trading and lending platform BlockFi, saying that the company’s Interest Account (BIA) product is a security under Texas law. BlockFi would not be able to sell its BIA product without first registering with the TSSB, according to a CoinDesk article. If the order takes effect following a hearing in October, BlockFi would not be able to offer it without first registering with the TSSB. The TSSB noted in a filing that the BIAs are investment contracts, notes, or pieces of evidence of indebtedness regulated as securities as that term is defined by Section 4.A of the Securities Act.
Users that deposit bitcoin into BlockFi’s Interest Account earn a daily interest rate of over 7% APY, which is paid monthly. According to the TSSB, BlockFi has at least 25,000 clients in Texas with a total asset value of $691 million. Two additional US states, Alabama and New Jersey issued identical notifications earlier this month, saying that BlockFi’s crypto interest product violated local securities laws.
BlockFi CEO Zac Prince rushed to Twitter to reassure existing BIA customers that the injunction will have no effect on them or any other BlockFi investments. According to the tweet, the NJ BOS has delayed the implementation of its prior ruling, which prohibits the formation of any new BlockFi Interest Accounts, until Thursday, July 29, 2021. Our current BIA clients or any of our other products are unaffected by the order. As Prince said, they will continue to work with all appropriate authorities to safeguard their clients’ interests and promote access to innovative financial solutions for all. Bitcoin was trading at $33,509 at press time, up 3.81 percent in the previous 24 hours. At the time of writing, the market-leading digital asset had a trading volume of $19 billion, accounting for 45 percent of the market. Texas, like New Jersey, is contending that the fact that users entrust their bitcoins to BlockFi for investment and commingling with other customers and business money may violate the state’s securities laws.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
