According to reports, the United States Securities and Exchange Commission is currently reviewing high-yield crypto lending products offered through Gemini, Celsius Network and Voyager Digital.
Bloomberg reports that the SEC is investigating digital asset lending services. According to reports, the main inquiry is focused on whether crypto lending services can be considered securities and must therefore be registered with SEC.
Cointelegraph reached out to Gemini and Celsius but they did not respond immediately.
According to the SEC, the main concern lies with crypto lending services’ high-yield offerings. These rates are often significantly higher than those offered by most savings banks. Crypto lending services offer interest rates ranging from 3% to 18% while traditional savings accounts offer less than 0.1%.
The Federal Deposit Insurance Corporation insures bank savings accounts. This means that investors are protected from theft and bank failure. Crypto lending services can lend digital assets of customers to investors. This raises investor protection concerns. The SEC has not charged the firms with any wrongdoing.
Related: Are Crypto-Lending Firms Hot: New Regulations Coming?
Since September 2021, the U.S. has been cracking down on crypto lending services. New Jersey and Texas state regulators issued cease-and-desist orders against Celsius Network.
The New York Attorney General’s (NYAG) office took a strong stand against Celsius and BlockFi in October 2021. They ordered them to cease their services. The NYAG accused the platforms of wrongdoing, and issued a cease-and-desist order. After being threatened with a lawsuit by the SEC, Coinbase, America’s leading crypto exchange, had to close their crypto yield product.