SoFi raises concerns over regulatory pressures from SEC

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San Francisco-based fintech firm SoFi has raised concerns over the U.S. Securities and Exchange Commission’s scrutiny of digital assets in its quarterly 8-K submission to the financial regulator.

In its Tuesday filing, SoFi highlighted the SEC’s action in April to revise Regulation ATS and the Exchange Act Rule, which could redefine the meaning of crypto exchange. If the proposal, currently open for public comments, is accepted, entities meeting exchange criteria would face stricter monitoring when handling trades of crypto assets seen as securities.

“Pending final adoption of the proposed rule, it is possible that we would need to obtain additional regulatory permission to conduct our business,” SoFi said.

“The time and cost of obtaining such permission could be significant, and is not guaranteed. Further, we may need to pause or alter certain aspects of our business until such permission is obtained.”

SoFi offers trading support for several cryptocurrencies, including Bitcoin (BTC), Ether (ETH), Dogecoin (DOGE), Litecoin (LTC) and Ethereum Classic (ETC). On June 9, they removed Solana (SOL) and Cardano (ADA) from their platform after the SEC suggested these assets could be seen as securities.

Experts in the industry have noted that publicly traded companies like SoFi, which have a broader scope than just crypto, face the potential risk of fines for crypto-related violations that could impact their other business sectors.

Last year, the company also faced a penalty from the Federal Reserve due to “certain crypto-related activities” deemed inappropriate for a bank holding company.

SoFi’s adjusted revenue in the second quarter saw a 37 percent increase from the previous year, reaching $488.8 million, which exceeded the estimated $476 million. Furthermore, the company saw a net loss per share of $0.06 during Q2, outperforming the projected loss of $0.07.

Although SoFi’s crypto business is smaller than dedicated crypto firms, it held $166 million in crypto investments by the end of the second quarter.

SEC’s crackdown on tokens

Tokens like Solana, Polygon and Cardano, which are currently embroiled in court battles, have experienced a 15 percent drop in their combined market capitalization, totaling $5 billion.

On June 5 and 6, the SEC sued Binance and Coinbase, which are among the biggest crypto exchanges. Similar to SoFi, the federal agency also alleged the two major exchanges selling unregistered securities.

Messari Crypto recently published its Ecosystem Brief: Rollup Specialization report. The report highlighted that the emerging markets category, including tokens identified as securities by the SEC, witnessed a 25 percent decrease.

Besides the SEC lawsuit, Binance is facing harsh regulatory actions worldwide. The exchange’s native token BNB’s market value dropped by 21 percent to $37 billion.

Cardano, led by Charles Hoskinson, also saw its market value drop. This asset, currently the eighth largest on Coingecko, last traded at $0.29 with a market cap of $10 billion, marking a 17 percent decrease.

Among the tokens, Polygon has faced the toughest challenge in recovering from the impact of the SEC’s actions. As of the time of writing, it holds a market value of around $6 billion, a 20 percent decrease from its initial $8 billion market cap.