SoFi, the financial services platform that introduced crypto trading in 2019, is winding down its crypto business, the company announced. New account creation has been disabled and existing users have three weeks to migrate their crypto accounts to Blockchain.com before they are automatically liquidated.
Migration eligibility is subject to some geographic restrictions: users in some states will have to sell certain unsupported tokens including Avalanche AVAX -2.35% and Sushi SUSHI + Swap, while New York State residents are ineligible for the migration altogether.
SoFi held nearly $140 million in cryptocurrency as of Q3, according to the company’s financial statement, mostly in Bitcoin BTC + (about $75 million) and Ethereum ETH + (about $47 million).
Heightened scrutiny
SoFi’s exit from crypto comes as a result of heightened scrutiny of the crypto sector by regulators, according to a report from Bloomberg. SoFi’s bank charter, granted in January 2022, was conditional on SoFi’s crypto business receiving a regulatory sign-off within two years, with the possibility for three one-year extensions.
SoFi had acknowledged the possibility of a swift wind-down of its crypto operations in its 10-K annual report, stating, “While we are engaging with the Federal Reserve to determine whether there is a path to conform our crypto-related activities to the requirements of the Bank Holding Company Act, there can be no assurance that such attempts will be successful or that we will receive any extensions from the Federal Reserve to continue our current crypto-related activities beyond the two-year conformance period from the date we became a bank holding company, and we may ultimately be forced to wind-down such activities in a short period of time.”
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