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Cryptogambling / SoFi Technologies shuts down crypto services

SoFi Technologies shuts down crypto services

Publish Date: 30/11/2023
Video: SoFi Raises Revenue Forecast for 2023

SoFi Raises Revenue Forecast for 2023

SoFi Technologies, a rapidly growing financial services platform, is leaving the crypto sector due to heightened scrutiny by banking regulators despite surges in token prices.

On Wednesday, the San Francisco company informed its crypto customers that they must either sell off their accounts in the next few weeks or transfer to the crypto exchange and wallet service Blockchain.com.

SoFi began 12 years ago as a student loan refinance company. Over time, it expanded into various services and obtained a bank charter in January 2022. The approval of the charter was conditional on a two-year conformance period for its crypto business. The company either had to receive necessary regulatory approvals for it or exit the digital asset sector.

In August, the Federal Reserve announced increased scrutiny of lenders’ participation in digital assets. Earlier in January, the Fed, along with the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, outlined concerns regarding the volatile nature of this asset class. Additionally, a crypto firm’s membership application to the Fed was rejected, leading Metropolitan Commercial Bank to exit the sector in the same month.

SoFi entered crypto in 2019 and became notably active, hosting an event at Bitcoin Miami last year. However, crypto has been a small portion of its business. According to SoFi’s financial statements, brokerage-related fees, including all crypto-related fees, amounted to around $6 million in the three months ending on September 30. As of September 30, digital assets held by SoFi totaled $139.4 million. Bloomberg’s forecasts suggest SoFi will report approximately $2 billion in revenue this year.

Customers to transfer crypto holdings to Blockchain.com

As part of the SoFi-Blockchain.com agreement, SoFi customers must transfer their crypto holdings to Blockchain.com before December 19, or their remaining balances will be liquidated. Also, starting Wednesday, customers cannot open new crypto accounts.

SoFi users who wish to close their crypto accounts also can take action before December 19.

On that date, active accounts will be automatically closed. Users will receive transaction details via email and will get proceeds through their brokerage account within 60 days. The migration is anticipated to be finished by 11 p.m.

However, details of the deal with Blockchain.com were not revealed. In the upcoming year, SoFi plans to begin directing its members to other crypto partners.

Blockchain.com President Lane Kassleman revealed that SoFi aims to continue providing crypto services to its customers, which is why it partnered with Blockchain.com.

“So you’ll still be able to link out to crypto products from the SoFi app,” Kassleman said. “You just won’t be able to access them within the SoFi domain. This is not dissimilar to how they offer insurance products, for example.”

Kassleman said that the partnership involves hundreds of thousands of users and hundreds of millions of dollars.

“It’s also not something that happened overnight. You can imagine the complexity of moving over all these users and so this partnership has been in preparation for over a year,” he said.

Blockchain.com does not provide direct services in all U.S. states. Additionally, several tokens will face restrictions when migrating to Blockchain.com in several states.

Customers in Virginia, Hawaii, Louisiana, New Jersey, Nevada, Tennessee and Texas will access services through Bakkt Crypto Solutions. These customers will need to agree to Bakkt’s terms and conditions.

Furthermore, Tokens like Aave, Stellar, Uniswap, Polkadot and others will be sold automatically during the account migration on December 19 for customers in those states.

New York users cannot migrate their accounts. These accounts will stay open until January 28. Trading will continue as usual until the December 19 deadline. However, from December 19 to January 28, accounts can only sell, not buy. After January 28, these accounts will be closed and liquidated following the same process as other users.

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