On Tuesday, leading crypto lending platform BlockFi announced securing a Money Services License in the state of Iowa. The news comes just two weeks after the troubled crypto lender was fined in the state for selling unregistered securities.
The Iowan license will allow BlockFi to sell payment instruments and receive money in the state. The crypto lender tweeted that it will start by enabling Iowan residents to trade stablecoins.
However, BlockFi’s announcement did not mention if the license covers the company’s yield-generating products. According to the firm, its interest accounts have not been registered and are unavailable in the United States.
BlockFi Pays Fine To Regulators
Earlier this month, the Iowa Insurance Division fined BlockFi over $943,000 for violating the state’s Securities Act. It said that BlockFi “offered and sold securities in Iowa that were not registered or permitted for sale in Iowa” and failed to register as a broker-dealer.
Meanwhile, the fine was part of a larger penalty imposed by the United States Securities and Exchange Commission (SEC) on BlockFi. In fact, it was one of the largest penalties imposed on a crypto firm by a federal regulator. The crypto lender was hit with $100 million in settlements, with half of it paid to SEC and the rest to 32 states that brought forward similar charges.
Soon after, BlockFi showed intentions to register with the SEC for an interest-bearing crypto account for its US customers. It would replace BlockFi’s current interest account offering.
BlockFi’s $250 Million Credit Line From FTX
BlockFi’s approval in the Midwestern state comes amid severe liquidity issues across the crypto industry. The news comes as a glimmer of good news for BlockFi, which is struggling in the worsening market conditions.
With crypto lender Celsius being the first domino to fall, other crypto firms are closely following suit. Moreover, BlockFi was among the lending firms that liquidated Three Arrows Capital (3AC), signaling the firm’s potential insolvency.
These conditions have also resulted in a round of layoffs from crypto firms. BlockFi CEO Zac Prince said the firm would let go of about 20% of its staff to remain profitable.
Just a week later, on June 21, BlockFi received a $250 million line of credit from the FTX exchange. And days later, it was rumored that crypto exchange FTX is in talks with BlockFi to purchase a stake in the company.