California Regulator Investigates Crypto Interest Accounts

The regulator also said in its view that some crypto interest account providers provide unregistered securities, such as BlockFi and Voyager.

The California Department of Financial Protection and Innovation (DFPI) has warned consumers to “use extreme caution” when dealing with interest-bearing crypto-asset accounts.

The DFPI said it is investigating several crypto interest account providers to determine if they “violate laws within the jurisdiction of the Department.”

In a July 12 memo, the DFPI pointed out that crypto interest account providers "are not governed by the same rules and protections as banks and credit unions" and that some platforms "prevent customers from to withdraw and transfer between their accounts."

“The Department is warning California consumers and investors that many crypto interest account providers may not have adequately disclosed the risks customers face when depositing crypto assets on these platforms ."

“Consumers are urged to exercise extreme caution before responding to any solicitation offering investments or financial services,” the DFPI added.

The DFPI also said it believes certain crypto interest account providers have provided unregistered credentials, pointing to two cease and desist orders it recently issued to BlockFi and Voyager to stop their offers in California.

The warning comes in response to crypto interest account providers such as Celsius Network and Voyager Digital who are both freezing client assets due to severe liquidity issues amid a crypto bear market .

As things stand, client funds from both platforms have been frozen for several weeks, and the fate of their depositors' holdings remains unclear.

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