Nexo to Phase Out Service in US After Hitting ‘Dead End’ With Regulators

Crypto lender Nexo today announced it will gradually phase out U.S. products and services over the coming months due to hitting a “dead end” with regulators. 

The U.K. company said in a Monday announcement that it had been talking with regulators for 18 months but the U.S. “refuses to provide a path for enabling blockchain businesses.”

Nexo is a digital asset platform that loans out client funds and uses the proceeds to pay interest. (Disclosure: Nexo is one of 22 investors in Decrypt.)

“Our decision comes after more than 18 months of good-faith dialogue with U.S. state and federal regulators which has come to a dead end,” the company said in a blog post. 

The company added that state and federal regulators had “inconsistent and changing positions” and that it now “cannot give our customers confidence that regulators are focused on their best interests.”

The company said it would from tomorrow discontinue its Earn Interest Product in eight states—Indiana, Kentucky, Maryland, Oklahoma, South Carolina, Wisconsin, California and Washington—and no longer allow U.S. customers to sign up to the Earn product. Access to accounts and withdrawals will not be affected, the company said.

State securities regulators in California and several other states in September took action against Nexo’s parent company Nexo Group, claiming the company’s Earn Interest Product was an unregistered security. 

Unlike other crypto lenders such as BlockFi, Voyager, and Celsisus, which have all collapsed following the fall of crypto project Terra and digital asset exchange FTX, Nexo has so far managed to keep its head above water.

Editor’s note: This article was updated after publication to clarify that while Nexo’s Earn product is being discontinued in the U.S., the company says customers will continue to have access to withdrawals.