Kentucky Prohibits Crypto Lender From Offering Accounts

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In Brief
  • The state of Kentucky said the company offers unregistered securities.

  • Celsius accounts deemed “unprecedented risk” to customers.

  • This comes as U.S. regulators mull over industry-wide regulations for crypto.

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The state of Kentucky banned the crypto lender Celsius from offering accounts within the state due to unregistered security offerings.

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The securities regulator for the state followed three other states which carried out the same policy. This emergency order came as the Kentucky Department of Financial Institutions claimed the company provides risky services to consumers. Particularly the claim is of unregistered securities in violation of state law. Kentucky regulators say that Celsius did not provide customers with detailed information on the aftermath of their deposits. 

According to the order, Celsius has the right to an emergency hearing for a rebuttal of the decision. However the decisive language of the order reveals a strong stance on the part of regulators. They called the service, “an unregulated market that represents an unprecedented risk to consumers.” 

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A spokesperson from the company said they are “disappointed these actions have been filed” and disagree with the order. However Celsius says there will be no disruption to service for customers. 

Regulations Reign

Kentucky is the latest of multiple States which banned Celsius from offering accounts to citizens. The others include Texas, Alabama, and New Jersey. Companies involved with crypto interest accounts often fall prey to heightened scrutiny from federal regulators. 

Last month BlockFi faced allegations from states, Kentucky being one. 

Although one of the most notable actions comes from the SEC. Earlier this month the Securities and Exchange Commission threatened Coinbase Global Inc. with a lawsuit over its newest Lend product. The upcoming Coinbase product would allow investors the ability for capital gains through lending out their crypto. 

However, before Coinbase could officially launch the product the SEC made its stance on the situation clear. Along with the lawsuit threat, the SEC launched a probe into the company, asked for employee information and a list of names on the Lend waiting list. Shortly after company scrapped the product, according to a blog post. 

While states dish out their own regulations, lawmakers prepare for more on a federal level. SEC Chairman Gary Gensler said crypto-related platforms need regulation for long term survival. In addition, the regulator detailed a roadmap for nationwide regulations for the industry. 

Until such decisions become set in stone, the crypto industry and all involved remain on at bay. 

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Savannah Fortis is a multimedia journalist covering stories at the intersection culture, international relations, and technology. Through her travels she was introduced to the crypto-community back in 2017 and has been interacting with the space since.

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