NEXO Under U.S Regulatory Scrutiny Over High Yield Crypto Product

Bob Mason

Nexo joins a growing list of crypto platforms to come under U.S regulatory scrutiny, with a high yield interest product the area of focus.

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Regulatory scrutiny has been in overdrive at the turn of the year. SEC Chairman Gary Gensler had warned the crypto market of what’s to come back in January.

SEC v Crypto

A number of exchanges have fallen under the watchful eye of the SEC in recent months. An ongoing area of focus continues to be the classification of cryptos and DeFi products. Just last week, the SEC hit BlockFi with a $100m penalty. The SEC claimed that BlockFi’s high yielding accounts were unregistered securities. It is this very issue of whether the SEC deems a product as a security that has resulted in the extended SEC case against Ripple. While the SEC deems Ethereum (ETH) not to be a security, the SEC alleges that Ripple Lab (XRP) raised over $1.3bn through an unregistered, ongoing digital asset securities offering.

Other crypto platforms have also been targets of the SEC, with even Coinbase (COIN) coming under regulatory fire over plans to launch a digital asset program called Lend. Via Lend, eligible Coinbase users can earn interest on selected assets with APYs starting from 4% on USD Coin (USDC). Coinbase halted the planned launch after receiving news that the SEC planned to sue without reportedly providing any explanation.

Nexo Comes Under Regulatory Scrutiny.

This week, Nexo (NEXO) announced voluntary changes to its Earn Interest Product in the U.S. According to the announcement, Nexo made the changes to comply with “newly-announced guidance”. While existing clients can continue to earn interest on their balances, new U.S clients will need to qualify to earn interest via a new product. Nexo also stated that the changes only affect the Earn Interest Product in the U.S and no other Nexo products.

The new product, referenced as Earn Interest Product 2.0 will be available once Nexo has finalized the registration process with “the relevant regulatory bodies”.

While there was no reference to the SEC, recent activity and the Nexo product in question suggests that the SEC was involved.

What is Nexo (NEXO)?

Nexo is a regulated institution for digital assets, offering its users the “opportunity to maximize the value and utility of cryptocurrencies“. Nexo achieves this by offering:

  • Tax-efficient Instant Crypto Credit Lines.
  • A high yielding Earn Crypto Interest Product.
  • Send & Pay capabilities.
  • Trading and OTC services.

Nexo users can earn daily interest on crypto and fiat currencies that include EUR, GBP, and USD. For fiat currencies, Nexo offers up to 20% annual interest, with the product offering a “unique daily payout”. Users can also earn up to 20% APR on idle digital assets, with interest paid daily.

Launched in 2018, Nexo manages assets for more than 3.5m users across 200 jurisdictions.

NEXO Price Action

At the time of writing, NEXO was up 1.04% to $2.045. Near-term, a move back through a current month high $2.373 would bring January’s high $2.839 into play. NEXO would need to move back through to $3.00 levels, however, to take a run at November’s high $3.655. From there, a move back through to $4.00 levels would bring May’s ATH $4.32 into play.

On CoinMarketCap, NEXO is currently ranked #76, with a market cap of $1,142m, at the time of writing.

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About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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