SoFi Ceases Cryptocurrency Trading, Encourages Migration to Blockchain.com
TLDR:
- SoFi, an online banking platform, discontinues its cryptocurrency trading service, citing regulatory challenges and evolving standards set by the Federal Reserve’s “novel activities supervision program.”
- Customers are urged to migrate their crypto assets to Blockchain.com, a digital wallet services platform, by December 19, with state regulations forcing some users to liquidate holdings based on their residency.
- SoFi’s decision follows a conditional two-year approval by the Federal Reserve, making it the first major institution affected by the regulatory changes introduced over the summer.
- Blockchain.com anticipates a significant migration of SoFi customers to its platform, with “tens of thousands” expressing intent to migrate immediately after the announcement.
- The announcement aligns with Blockchain.com’s recent success in securing a $110 million funding round, the fourth-largest crypto raise in 2023, reinforcing its position in the cryptocurrency industry.
SoFi Ceases Cryptocurrency Trading, Encourages Migration to Blockchain.com
SoFi, the online banking platform that ventured into cryptocurrency trading in 2019, has made a significant announcement – it is discontinuing its cryptocurrency trading service.
The revelation came through an email sent to customers on Wednesday morning, outlining the transition plan for existing crypto assets.
Regulatory Landscape and Conditional Approval
SoFi, known for its high-yield savings accounts and investment services, has been operating its crypto trading under a two-year conditional approval from the Federal Reserve.
However, it appears to be the first major financial institution to be affected by the Fed’s “novel activities supervision program,” a regulatory initiative unveiled over the summer.
This program imposes strict guidelines on how banks engage with emerging financial technologies, including cryptocurrencies.
A SoFi spokesperson cited the evolving crypto requirements set by the Federal Reserve as the catalyst for their decision.
The regulatory landscape for digital assets, following SoFi’s approval as a bank holding company, indicated an increasing stringency that made full approval for their crypto business less likely over time.
Migration to Blockchain.com
Existing SoFi crypto customers now have an opportunity to migrate their assets to Blockchain.com, a well-known platform for digital wallet services.
This migration option is presented as an alternative for customers as SoFi terminates its cryptocurrency trading services.
The spokesperson emphasized that the decision to discontinue crypto services is aligned with the Federal Reserve’s regulatory guidance and the evolving standards for digital asset businesses.
Migration Deadline and Regulatory Implications
Customers have until December 19 to complete the migration of their crypto holdings to Blockchain.com. However, certain state regulations will compel users in specific regions to liquidate their crypto investments entirely.
Notably, residents in New York will be required to sell all their SoFi crypto holdings. In some other states, such as Texas, users will need to divest a set of tokens including DeFi-natives AAVE, COMP, MKR, and UNI.
Blockchain.com anticipates a substantial migration of SoFi customers to its platform. The company revealed that immediately following the announcement, “tens of thousands” of SoFi customers expressed their intent to migrate.
The expectation is that most SoFi crypto clients will opt for migration to avoid potential tax liabilities associated with selling their holdings.
Blockchain.com Funding Round
This development coincides with Blockchain.com’s recent achievement in securing a $110 million funding round, marking it as the fourth-largest crypto raise in 2023.
The successful funding further solidifies Blockchain.com’s position in the cryptocurrency industry.
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