The SEC and a consortium of 32 states recently announced a $100 million settlement with BlockFi Lending LLC over its crypto lending product, BlockFi Interest Accounts. The SEC alleged BlockFi had violated the securities laws by failing to register its interest-bearing crypto lending product as a security, failing to register itself as an investment company, and making false statements about the risks of its product.

On the heels of this settlement, BlockFi announced that it will seek to register its crypto lending product as a security. While hailed by SEC Chair Gary Gensler as a signal of “the Commission’s willingness to work with crypto platforms to determine how they can come into compliance with” the securities laws, the settlement leaves unanswered important questions for those similarly situated in the industry. However, given the SEC’s short 60-day timeline for BlockFi to come into compliance with the securities laws, the wait for regulatory clarity may not be long.

Please click here to read the full alert memorandum.