Nexo exits the US over lack of clear regulations
UK-based crypto lender Nexo leaves the US due to a lack of clear regulations.
Nexo has said that it will no longer accept new US registrations and that it will wind down its operations for existing customers in the country. In a blog post, the crypto lender said it was taking the “regrettable but necessary decision” to exit the US.
The reason behind this move is that it feels dialogue with US state and federal regulators has “come to a dead end”.
It said, “It is now unfortunately clear to us that despite rhetoric to the contrary, the US refuses to provide a path forward for enabling blockchain businesses”.
Regulation in the US
Like other jurisdictions, the US is looking at cryptocurrency regulation. In September 2022, the Biden White House released a framework on what crypto regulation in the US should look like.
It indicated that it would rely on existing regulators such as the Securities Exchange Commission and the Commodity Futures Trading Commission. However, nothing has been implemented as yet.
From Nexo’s statement, it appears that there is continued confusion around who will handle what. The crypto lender went as far as to say that regulators “are insistent on taking positions that are inconsistent with one another”.
As a result, it has decided to take the significant step of exiting the US market.
Regulation in the future
Crypto regulation is a hot topic following FTX’s collapse and BlockFi’s subsequent bankruptcy filing. Fingers have been pointed in the US about how both could have been prevented.
Nexo’s decision to exit the market is a significant one. It indicates that cryptoasset technology companies are not feeling comfortable in a confusing and contradictory regulatory environment.
The UK is working on its own regulation of cryptoassets. The Treasury is finalising plans for a package of rules for the cryptocurrency industry. These are reported to include limits on foreign companies selling into the UK and provisions for how to deal with the collapse of companies.
The guidelines are part of the financial services and markets bill which has reached the committee stage in the House of Commons.
*Cryptocurrencies aren't regulated in the UK and there's no protection from the Financial Ombudsman or the Financial Services Compensation Scheme. Your capital is at risk. Capital gains tax on profits may apply.
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