Crypto regulations are becoming a heated topic in the crypto space, especially in regards to DeFi lending services. The US has been leading these discussions, and now individual states are introducing new rules.
Kentucky’s securities regulator has issued a cease and desist order against Celsius crypto lending firm. The filing made on Thursday stated that the action against the firm was because of its “Earn Interest Accounts.”
Crypto Regulations in the US
Individual US states have been adamant in enhancing regulations that will govern the crypto sector. Kentucky will be the fourth state that will introduce laws regarding cryptocurrencies. Prior to Kentucky’s order, Alabama, New Jersey, and Texas had issued similar notices against Celsius.
When giving cause for its recent action, the Kentucky regulator stated that words used by Celsius to describe its services were against the securities laws in the state. Some of these words include “financing fee” and “rewards.”
The regulator also stated that Celsius did not disclose information about how it used the deposits made by investors into the firm. Celsius is yet to give an official statement on this fresh order by Kentucky.
However, in an earlier statement, the company stated, “We are disappointed these actions have been filed and wholeheartedly disagree with the allegations being made that Celsius has not complied with the law. We always have, and will continue to, work with regulators in the US and globally to operate in full compliance with the law.”
Nevertheless, the company CEO, Alex Mashinsky, stated that he was willing to sit down with regulators to explain how the crypto lending sector works.
Other Crypto Firms also Receive Warnings
Celsius is not the only crypto lending firm that has received warnings from state regulators. State regulators in Alabama, New Jersey and Texas had previously filed a cease and desist order against BlockFi. BlockFi also offers crypto lending services.
The Securities and Exchange Commission (SEC) has not issued warnings or taken any action against BlockFi and Celsius over their crypto lending programs. However, the SEC had earlier issued a Wells Notice against Coinbase over a crypto lending program that the exchange was planning to introduce. The exchange later delayed the launch of the program.