[NEWS] US company SoFi to withdraw from cryptocurrency trading service, move to Blockchain.com

SoFi, a major US online lending service provider, announced that it will end its cryptocurrency trading service by the 19th of this month. Existing accounts will be migrated to the mobile wallet Blockchain.com.

Existing SoFi users will receive an email with details of the migration. Users who wish to migrate to Blockchain.com must opt-in in advance, and the deadline is the 19th of this month. Users who do not wish to migrate will need to liquidate their crypto assets.

SoFi explains that by migrating to Blockchain.com, the company will be able to expand its available services, including the use of more tokens, advanced trading function services, and security measures such as self-custody of crypto assets.

The reason behind SoFi's withdrawal from trading services is the Federal Reserve's strengthened oversight of the banking sector. In August, the Federal Reserve launched a new activity monitoring program to monitor the activities of companies related to digital assets and blockchain, including cryptocurrencies.

Peter Smith, co-founder and CEO of Blockchain.com, said, "This partnership marks a pivotal moment in Blockchain.com's growth." According to SoFi's latest earnings report, the company has $139 million worth of crypto assets in custody from users.

Regulatory scrutiny in the background

In 2022, SoFi received a banking charter, which requires it to obtain necessary approvals for crypto-related business or dissolve. At the time, the Fed noted that crypto exchange SoFi Digital Asset "engaged in certain crypto-related activities that the Fed determined were impermissible as a bank holding company."

According to a filing with the SEC, SoFi had the option to extend the charter three times for one year, provided it did not expand its impermissible activities. At the time, SoFi warned that it would scale back its crypto-related business in the short term and may forcibly liquidate users' holdings during a market downturn.

SoFi launched its crypto-exchange service in 2019. However, it struggled to monetize, and in the third quarter, it recorded only $6 million in brokerage-related fees for its crypto-exchange service. It appears that SoFi decided to withdraw from the cryptocurrency business in light of this situation and the strict scrutiny it faces from the Federal Reserve.

Although SoFi will withdraw from the cryptocurrency business, it says that other investment services it offers will not be affected. In addition, securities accounts and individual retirement accounts (IRAs) will continue to operate as normal.

Reference:Announcement,SEC documents
Image: Shutterstock

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