SoFi Technologies, the U.S.-based personal finance company, announced that it will cease its cryptocurrency trading services for users before December 19.
In a statement issued on November 29, the company reported an immediate suspension of new crypto account openings on SoFi. Existing users have the option to migrate their accounts to Blockchain.com or close them.
This announcement garnered significant attention as SoFi, known for offering a variety of financial services, including brokerage accounts and Individual Retirement Arrangements (IRAs), took this abrupt initiative. However, the decision to cease crypto services will not impact these other tools offered by SoFi Invest.
Existing users choosing to migrate their accounts to Blockchain.com must consider specific requirements. For instance, those located in Hawaii, Louisiana, New Jersey, Nevada, Tennessee, Texas, or Virginia must liquidate certain altcoins unsupported by Blockchain.com before transferring their accounts. Additionally, SoFi clients in New York must close their accounts before January 2024 due to the unavailability of Blockchain.com in the state.
SoFi Might Have Felt Threatened by Stricter Regulations
While SoFi’s statement did not provide a specific reason for ending its services, there is speculation about potential increased scrutiny from banking regulators in the cryptocurrency sector. The company also did not disclose whether this decision is related to any specific regulatory non-compliance.
In its latest earnings report, SoFi revealed it held $139 million in Bitcoin, Ether, and other cryptocurrencies in client deposits, up from $107 million the previous year. Furthermore, the Federal Reserve determined that SoFi Digital Assets, LLC engaged in certain activities not allowed for a bank holding company under the Bank Holding Company Act and Regulation Y. Although regulatory authorities allowed the company to operate for two years and granted three-year extensions, the company has now decided to cease its services.
The crypto sector is facing a renewed wave of regulatory measures from governments and other entities. This represents a barrier that sometimes seems insurmountable and limits the operational capacity of platforms. This is not the first closure notice echoing in the community, and it likely won’t be the last.
