Crypto Lender Nexo Stops Interest on New Deposits

Nexo, a crypto lender, has stopped paying interest on new deposits, Bloomberg reported Friday (Feb. 18), and is now planning to offer a new product.

This comes after a recent U.S. Securities and Exchange Commission (SEC) settlement with BlockFi over a similar product, the report said.

Nexo, in a statement posted to its official subreddit Friday, said it is voluntarily making the changes “in light of BlockFi’s agreement to pay $100 million to federal and state securities regulators to settle allegations that it illegally offered a product that pays customers high rates to lend out their digital tokens.”

BlockFi will be reportedly registering its offerings with the regulator. Nexo will follow the same path.

Nexo’s current U.S. customers will be unable to earn interest on new deposits, though they’ll be able to keep earning on existing balances for digital assets. New clients won’t be able to access the product at all.

According to the firm, it will make a new offering available that’s compliant with securities laws — and the changes will be in place “until the restructuring of the Earn Interest Product and the registration process with the relevant regulatory bodies are finalized,” according to the statement.

Read more: Small Investors’ Lottery Mentality Tested as Crypto Crashes 

But they conveniently ignore the part of Wall Street’s advice that bitcoin should be “up to 5% of your portfolio.”

This, PYMNTS wrote, ends up being a conundrum for crypto investors: With so much volatility, timing is more important than with traditional investments.

There’s also the wide availability of complex products like options and futures, which come with the added risk of margin trading.