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- 1 SoFi Technologies reported the discontinuation of crypto trading services.
- 2 The finance company started providing a diverse array of financial services, including cryptocurrency trading in 2019.
The cryptocurrency space saw most of its initial development in the United States region. However, the present times are not the same and the nascent digital asset class struggles to sustain itself in the region. This happened after the increased regulatory scrutiny against crypto firms and related entities. Recently, a prominent online banking platform, SoFi Technologies, reported the discontinuation of crypto trading services.
The company notified crypto customers on the platform via an email on Wednesday, November 29, 2023, about shutting down the services. It also informed that such clients can use Blockchain.com to move their assets.
SoFi, a prominent online banking platform recognized for its high-yield savings accounts and investment services, recently announced the discontinuation of its cryptocurrency trading service. This strategic shift was conveyed to customers through an email notification sent on a Wednesday morning, marking a significant development in the evolving landscape of financial institutions engaging with cryptocurrencies.
The finance company started providing a diverse array of financial services, including cryptocurrency trading in 2019. The recent decision to cease its crypto trading services comes in the wake of the Federal Reserve’s introduction of the “novel activities supervision program” during the summer.
SoFi has been recognized not only as an online banking platform but also as a comprehensive financial hub, offering high-yield savings accounts and investment opportunities. The platform’s foray into cryptocurrency trading added a dynamic dimension to its services.
As part of this strategic realignment, existing crypto customers of SoFi now have the option to transition their assets to Blockchain.com, a well-known provider of digital wallet services.
Federal Reserve’s Actions Got SoFi’s Crypto Business
The decision to discontinue crypto services aligns with the Federal Reserve’s expanded oversight of cryptocurrency activities within regulated U.S. banks. The “novel activities supervision program” is designed to encompass not only cryptocurrencies and emerging asset classes but also the applications of distributed ledger technology with the potential for significant impacts on the financial system.
SoFi’s move reflects its response to the increasingly stringent regulatory environment outlined by the Federal Reserve, particularly in areas such as crypto-asset custody, crypto-collateralized lending, facilitating crypto-asset trading, and participation in stablecoin/dollar token issuance or distribution.
A spokesperson from SoFi explained that the decision was influenced by the regulatory guidance provided by the Federal Reserve for its digital asset business, following the company’s approval as a bank holding company. The spokesperson emphasized the growing strictness of the Fed’s crypto requirements over time, making full approval for SoFi’s crypto business less likely.
Affected SoFi customers have until December 19 to transfer their funds to Blockchain.com. However, some customers may face state regulations compelling them to exit their crypto investments entirely, adding complexity to the transition process.
SoFi’s decision to discontinue cryptocurrency trading services underscores the impact of regulatory scrutiny on financial institutions navigating the dynamic and evolving landscape of digital assets.
As a comprehensive online banking platform, the online banking firm continues to adapt its services to align with the changing regulatory environment and meet the evolving needs of its diverse customer base.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
