The US SEC is reportedly moving to outlaw crypto lending products belonging to Celsius Network, Gemini, and Voyager Digital. According to a Bloomberg report, the move is informed by concerns over the high-yield offering provided by these exchanges, which is significantly higher than the interest most banks offer.
The same report stated that the commission is conducting an inquiry into the lending services. The inquiry is focused on determining if these services should be considered securities and registered with the commission, the report found.
While interest rates offered by crypto lending services range between 3% and 18%, traditional banks provide rates below 0.1%. Per the SEC, the high-yield offering by the former raises concerns on investor protection, even as digital assets remain sparsely regulated. In contrast, banks’ savings accounts are insured by the Federal Deposit Insurance Corporation, protecting investors against the dereliction or negligence of banks.
Crypto lending services have faced heavy scrutiny from regulatory bodies in the US since late 2021. Similarly, in September, Coinbase, the leading US exchange, was compelled to stop the launch of its crypto yield product following a lawsuit threat from the SEC.
