SoFi to Exit Crypto Business Amid Increased Regulatory Scrutiny
SoFi, an online lending and personal finance company, recently announced it would be exiting its cryptocurrency business. The company had launched its cryptocurrency offering in August of 2020, offering customers the ability to buy, sell, and hold Bitcoin, Ethereum, and Litecoin.
SoFi cited increased regulatory scrutiny as the primary reason for exiting the crypto business. The company explained that it wanted to provide its customers with the “best products and services” and that it did not believe the regulatory environment was conducive to offering cryptocurrency services.
Despite exiting the crypto business, SoFi will continue to offer traditional securities products, including stocks, ETFs, and REITs. In addition, they will continue to allow customers to save, invest, and pay down their debt.
SoFi’s exit from the cryptocurrency business comes amid heightened scrutiny from regulators in the United States. The Financial Crimes Enforcement Network (FinCEN) recently proposed requiring banks and some other financial services companies to report transactions involving “convertible virtual currency” to the Internal Revenue Service (IRS).
The heightened regulation in the crypto space has caused many financial services companies to rethink their cryptocurrency strategies. Companies such as Fidelity and JPMorgan have announced they are suspending new crypto services. JPMorgan also said it was considering shutting down its own crypto exchange.
At the same time, other fintech companies such asPayPal, Square, and Robinhood have made significant investments in the crypto space. They have begun offering customers the ability to buy, sell, and hold cryptocurrencies directly through their apps.
It remains to be seen how SoFi’s exit from the cryptocurrency space will affect its customers. It is clear, however, that increased regulation is creating a challenging environment for businesses in the crypto space.