The U.S. Securities and Exchange Commission (SEC) is reportedly reviewing some of the high-quality crypto loan products offered by Gemini, Celsius Network and Voyager Digital.
According to a report published in Bloomberg, the SEC is conducting a survey of digital asset lending services. The main focus of the investigation is said to be on whether the crypto loan services could be considered securities and should therefore be registered with the commission.
Gemini and Celsius did not immediately respond to Cointelegraph’s request for comment.
The SEC’s main concern is said to lie with the high-yield supply of crypto lending services, which are often considerably higher than most savings banks. The interest rates proposed with crypto lending services varies from 3% to 18%, while savings accounts of traditional banks offer less than 0.1%.
Banks ’savings accounts are insured by the Federal Deposit Insurance Corporation, which means investors are protected from bank failure and theft. However, crypto lending services lend customers ’digital assets to other investors, which according to the SEC raises concerns about investor protection. It is important to note that the SEC has not blamed the companies for any wrongdoing.
Related: Cryptographic loan companies on the hot seat: new regulations coming?
Cryptographic lending services have faced regulatory repression in the United States since September 2021. State regulators of New Jersey and Texas have issued a cease and desist order against Celsius Network.
In October 2021, the New York Attorney General’s Office (NYAG) attacked Celsius and BlockFi, ordering them to close their services. The NYAG alleged an offense and issued a cease and desist order against the platforms. Coinbase, the leading U.S. cryptocurrency exchange, had to close its cryptocurrency product even before launch after the SEC threatened a lawsuit.