Nexo to restructure its Earn Interest Product to comply with US regulations

Nexo will be changing its policy changes for its US clients. The change comes as the US Securities and Exchange Commission (SEC) focuses its attention on the decentralized finance (DeFi) sector.

Nexo announced a new policy for US clients

Nexo sent an email to its customers and released a statement on its subreddit highlighting these policy changes. The changes will affect both new and existing users, with Nexo saying that it has made the change “to comply with newly-announced guidance.”

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The announcement said,

Top-ups to your Nexo Wallets made after today will not earn interest until the restructuring of the Earn Interest Product and the registration process with the relevant regulatory bodies are complete, as per the recently received guidance. Once complete, all new accounts will be transferred to the Earn Interest Product 2.0, and the new top-ups will earn interest.

Nexo has also said that the Earn Interest Product will not be available to new users until restructured. The platform has also added that it will register the product with the relevant regulatory bodies according to the set guidelines.

“The current changes only affect Nexo’s Earn Interest Product in the US and have no impact on any other Nexo products. Non-US clients are not subject to the SEC’s guidance and remain unaffected by any of these changes,” the announcement added.

Move triggered by shifting regulatory framework

The announcement comes as the SEC shifts its regulatory oversight to the DeFi lending sector. This week, BlockFi, a cryptocurrency lending platform, made a $100 million settlement with the SEC and other state regulatory agencies. BlockFi has also announced plans to transform the BlockFi Yield product into a security following the scrutiny.

The SEC chair, Gary Gensler, has noted that the DeFi lending sector remains highly unregulated and poses risks such as market manipulation. Hence, DeFi lending firms are being forced to restructure and be compliant.

Nexo and crypto lending firm Celsius are currently facing scrutiny in New York. The details of the matter are still unclear, but this could explain the recent product restructuring change by Nexo.