29 Jun BlockFi Gets Money Services License in Iowa Weeks After Paying a $1M Penalty
Leading cryptocurrency lending platform BlockFi has secured a money services license in the state of Iowa, allowing the company to offer stablecoins trading and instant ACH transfers to local customers.
We’re excited to announce that we’ve received our Money Services License in Iowa.
Iowa residents can now trade stablecoins on our platform and instantly transfer funds via ACH. pic.twitter.com/sNEFIlCeWY
— BlockFi (@BlockFi) June 28, 2022
BlockFi Pays $1 Million Fine to Iowa Regulators
The new license comes barely two weeks after the Iowa Insurance Division ordered the crypto lender to cease operation and pay $943,000 for violating the securities law in the jurisdiction. According to the report, BlockFi offered a securities trading platform to Iowan residents without registering it with the appropriate authorities.
The fine was part of the company’s $100 million settlement with the United States Securities and Exchange Commission (SEC) and other regulators in 32 states. The crypto lender was ordered to pay $50 million to the SEC and the remainder to securities regulators in each jurisdiction.
The $100 million fine is perhaps one reason BlockFi resorted to reducing its workforce by 20% earlier this month, citing a “dramatic shift in macroeconomic conditions worldwide.”
BlockFi Secures $250M Credit Line From FTX
Although BlockFi’s CEO Zac Prince said “everything is working,” the company recently signed a term sheet deal with FTX to secure a $250 million credit facility to bolster its balance sheet and position in the market. Prince said the partnership was “equal parts an offensive and defensive move,” and the loan will help safeguard clients’ funds.
Three days after the revolving credit agreement, the crypto lender said it would increase interest rates on seven crypto assets across all tiers of its BlockFi Interest Account (BIA). The new APYs will go into effect on July 1.
BlockFi said it was able to increase its APY amid the bear market because of effective risk management, decreasing market competition, and a changing macro yield environment.
Meanwhile, reports emerged earlier this week that FTX is planning to acquire a stake in the crypto lending company. Sources familiar with the matter said both firms are still negotiating the deal.
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