(Bloomberg) - The U.S. Securities and Exchange Commission is warning investors about risks associated with accounts that pay clients high interest rates for depositing crypto assets.
Companies offering interest-bearing accounts for digital assets don’t provide the same protections as banks and credit unions, and the deposits aren’t insured, the regulator’s Office of Investor Education and Advocacy said in an investor bulletin Monday. Earlier in the day, the SEC announced that BlockFi Inc. had agreed to pay $100 million to federal and state securities regulators to settle allegations that it illegally offered a product that pays customers high rates to lend out their digital tokens.
The SEC’s investor advocacy office urged investors to carefully read through any disclosures related to interest-bearing accounts and said the products raised several issues, including:
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Assets held in those accounts can be used by companies for a variety of investment activities, including as loans to institutional investors
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Risks that retail investors face generally with crypto assets, including price volatility and possible fraud
By Allyson Versprille
