BlockFi dramatically achieved a licence in Iowa 2 weeks after being imposed with a hefty fine by the Iowa authorities
By Shashank Bhardwaj
BlockFi, a leading crypto lending platform, has obtained a Money Services Licence in the state of Iowa, allowing the company to offer local customers stablecoin trading and instant ACH transfers. This announcement comes only two weeks after Iowa regulators fined BlockFi for offering and selling unregistered securities.
Due to the state's licence, the crypto lender will be able to buy and sell payment instruments in Iowa. BlockFi announced on Twitter on June 28 that it would begin by enabling stablecoin trading for Iowa residents.
BlockFi tweeted, "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."
According to the company's website, its interest-bearing crypto accounts have not been registered and are not offered or sold in the United States. BlockFi did not specify whether Iowa's licence applied to its yield-generating product in its tweet.
Earlier on June 14, the Iowa Insurance Division ordered the crypto lender to cease operations and pay $943,000 for violating the state's securities laws. The fine was part of a $100 million settlement with the Securities and Exchange Commission (SEC) and other regulators in 32 states. The crypto lender was ordered to pay the SEC $50 million and the rest to securities regulators in each jurisdiction.
BlockFi reportedly 'offered and sold securities in Iowa that were not registered or permitted for sale in Iowa' along with failing to register as a broker-dealer or agent. The fine was one of the largest ever imposed by a federal regulator on a crypto company. The $100 million fine is likely one of the reasons BlockFi reduced its workforce by 20 percent earlier this month, citing a 'dramatic shift in macroeconomic conditions worldwide.’
The new licence is good news for BlockFi, as the company has struggled along with other crypto companies in the past. BlockFi was one of the lending firms forced to liquidate some of the positions from venture firm Three Arrow Capital (3AC) on June 16. The incident took place after the latter was unable to meet a margin call on its Bitcoin borrowings.
A week later, on June 21, BlockFi agreed to a $250 million revolving credit facility from another leading crypto exchange FTX to strengthen the company's balance sheets and the platform. Following that, a WSJ report revealed that FTX was in talks to acquire a stake in BlockFi. The companies, however, were unable to reach an agreement.
Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajsh
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