Kentucky Regulator Cracks Down on BlockFi Interest Account

BlockFi, a secured non-bank lender that offers cryptoasset-backed USD loans to cryptoasset owners, released a statement on Twitter saying that it would stop accepting new BlockFi Interest Account (BIA) clients residing in Kentucky immediately in light of the order from the Division of Securities of the Kentucky Department of Financial Institutions (KDFI) regarding the BIA operations in the state of Kentucky.

Up to now this is the fifth states in the United States that forbid BlockFi from permitting individuals to create new BIAs until the issues with regulators are solved.

The New York City-based cryptocurrency finance company BlockFi was founded in 2017 as a cryptocurrency lending firm that offers interest-bearing accounts called "BIAs" and also provides customers with a cryptocurrency-denominated credit card. Since January 2018, the company has allowed lending services that leverage crypto collateral.

"The order prohibits BlockFi from soliciting or offering any securities in Kentucky. BlockFi firmly believes that the BIA is lawful and appropriate for crypto market participants. But in light of the order, BlockFi will stop accepting new BIA clients residing in KY immediately. All existing clients worldwide continue to have access to our products, services and assets on the BlockFi platform." said BlockFi at its official Twitter account, "We remain steadfast in our commitment to protect consumers' rights to earn interest on their crypto assets".

Fazzaco reported that the Texas State Securities Board (TSSB), the Texas state regulator, had moved against BlockFi​, alleging that the BlockFi Interest Account (BIA) has possibly violated the state securities laws.