Just two weeks after being fined by Iowa regulators for offering and selling unregistered securities, crypto lending platform BlockFi announced on Tuesday that it had received a money services license in the ‘State.
The Iowan license will allow the crypto lender to receive money and sell payment instruments in the state. BlockFi on Twitter said it would start by allowing residents of Iowan to trade stablecoins.
We are thrilled to announce that we have received our Iowa Money Services License.
Residents of Iowa can now trade stablecoins on our platform and instantly transfer funds via ACH. pic.twitter.com/sNEFIlCeWY
—BlockFi (@BlockFi) June 28, 2022
BlockFi did not specify whether the license would cover its yield-generating product. According to BlockFi, its interest accounts have not been registered and are not offered or sold in the United States.
Previously, on June 14, the Iowa Insurance Division (IID), responsible for securities sales in the state, fined BlockFi more than $943,000 for violating the securities law of the state. IID alleged that BlockFi had “offered and sold securities in Iowa that were not registered or licensed for sale in Iowa” and did not register as a broker or agent.
The fine was part of a larger penalty imposed by the U.S. Securities and Exchange Commission (SEC) in February for failing to register an offering of high-yield interest accounts that the commission considered securities.
The fine was one of the heaviest penalties ever imposed by a federal regulator on a crypto firm. BlockFi was hit with $100 million in settlements, half of which went to the SEC and the other half to 32 states that filed similar charges.
Shortly after, BlockFi said it intended to register with the SEC for interest-bearing crypto security for its US customers to replace its current offering of interest-bearing accounts.
The new license is a glimmer of good news for BlockFi which has struggled along with other blockchain and crypto companies amid deteriorating market conditions and plummeting crypto prices.
On June 16, BlockFi was among lenders forced to liquidate some of the positions of venture capital firm Three Arrow Capital (3AC) as the latter was unable to meet a margin call on its Bitcoin (BTC) borrowings.
Celsius, a rival crypto lending platform, suspended customer withdrawals on June 13, attributing the decision to market conditions. Further reports followed that the company was facing cash flow problems and would soon face insolvency.
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These terms have also led to a series of layoffs from blockchain and crypto companies, with BlockFi CEO Zac Prince saying on June 14 that he would lay off 20% of his staff in order to stay profitable. It’s unclear how much of an effect the SEC’s financial sanctions had on the decision.
A week later, on June 21, BlockFi received a lifeline from crypto exchange FTX which saw BlockFi sign a $250 million revolving credit facility agreement to strengthen the company’s balance sheets and strengthen the platform.
A few days later, it was reported that FTX may be in talks to buy a stake in BlockFi, although a BlockFi spokesperson told Cointelegraph on June 24 that it “does not comment on market rumours.” and “still negotiating the terms of the deal”. Meanwhile, shareholders would be unhappy with the move because it would wipe out equity.
It was recently reported that Anthony Pompliano’s investment firm, Morgan Creek, was trying to arrange an alternative $250 million deal to buy a majority stake in BlockFi.