Nexo’s Comeback in the U.S.
In a move to re-establish its presence in the United States, Nexo has announced its comeback after an intense regulatory environment led by the SEC under former Chair Gary Gensler. The crypto lending platform, which previously faced scrutiny for its Earn Interest Product (EIP), made this announcement on Monday. The company has secured a $45 million settlement with the SEC, which prompted the relaunch of key offerings, namely its Yield, Exchange Loyalty, and Credit Lines, in a compliant manner.
Compliance and Infrastructure
Utilizing the trading infrastructure provided by Bakkt, a digital asset platform developed by the parent company of the New York Stock Exchange, ICE, Nexo aims to ensure compliance with U.S. regulations in delivering its services. This framework will enable users to trade cryptocurrencies, take out crypto-backed loans, earn loyalty rewards, and earn yields on their digital assets, whether on fixed or flexible terms. Nexo boasts an impressive $11 billion in assets under management.
Regulatory Challenges
The SEC’s previous charges against Nexo in 2023 highlighted the company’s failure to register the offering of its EIP as a security. Although Nexo did not admit to any wrongdoing, it agreed to a cease-and-desist directive. As a result, Nexo began scaling back its U.S. operations in 2022, and this recent relaunch represents a strategic shift following a thorough reassessment of its business practices. Eleanor Genova, Nexo’s head of communications, stressed that the current offerings are distinct from the discontinued EIP and are developed through partnerships with licensed U.S. service providers, with some features accessible via a third-party investment advisor.
Recent Penalties and Industry Context
Amid these developments, the California Department of Financial Protection recently imposed a $500,000 fine on Nexo for issuing over 5,000 loans without a license to residents of the state. Nexo’s representatives have claimed the penalty does not reflect the firm’s modern operational practices.
The settlement reached with the SEC comes amid a wider crackdown on the crypto lending sector, a trend observed with other platforms like BlockFi and Genesis, following the significant disruptions caused by the collapse of major players in the cryptocurrency market, including FTX under Sam Bankman-Fried.
Industry Optimism
In April, Nexo hinted at its intent to return to the U.S. marketplace during an event featuring prominent speakers, including former President Donald Trump, who expressed a favorable outlook on cryptocurrency as a pivotal component of future finance. Trump stated,
“We see the opportunity for the financial sector and want to ensure we bring that back to the U.S.”
This highlights a broader optimism from some industry leaders regarding the potential of cryptocurrencies in reshaping financial landscapes.
