Alabama’s regulatory agency takes steps to prohibit crypto companies from selling their products

  • The Alabama Securities Commission (ASC) has taken the first step toward prohibiting the sale of cryptocurrencies in the state
  • According to the ASC, the firm has generated at least $14.7 billion through the sale of these BIAs, which the regulatory body attributes in part to unregistered securities sold in contravention of the Securities Law
  • The consequence of a lack of regulatory certainty becomes increasingly evident as the regulatory noose tightens around crypto-businesses

The Alabama Securities Commission (ASC) has taken the first step toward prohibiting the sale of cryptocurrencies in the state. Director Joseph Borg of the Alabama Securities Commission announced Wednesday that he has issued a show-cause order requiring cryptocurrency BlockFi to explain why they should not be directed to cease and desist from selling unregistered securities in Alabama, according to a press release from the ASC. 

BlockFi Interest Accounts are interest-earning cryptocurrency accounts sold by BlockFi, a company located in New Jersey (BIAs). According to the ASC, the firm has generated at least $14.7 billion through the sale of these BIAs, which the regulatory body attributes in part to unregistered securities sold in contravention of the Securities Law.

In a news statement, ASC Director Borg noted, There are hundreds of companies registered with the ASC, as required by law, to offer securities to the people of Alabama. While the majority of persons registered to sell securities live outside of Alabama, anybody providing securities to an Alabama citizen must be registered before making an investment offer. BlockFi is accused of promoting itself as a US-regulated business while failing to register with the ASC or any other securities regulator, according to the ASC’s show cause order. The timing is peculiar, given that New Jersey regulators just ordered BlockFi to cease providing BIAs, while simultaneously giving the bitcoin platform an additional week until July 29 to comply.

New Jersey’s Bureau of Securities [NJ BOS] has postponed the ban’s implementation date, according to BlockFi CEO Zac Prince. He continued by saying that they are adamant that the BlockFi Interest Account is not a security, as per the company.  They are completely functioning for all of their existing clients in New Jersey and across the world, and they continue to have access to all of the BlockFi platform’s products, services, and assets. 

The consequence of a lack of regulatory certainty becomes increasingly evident as the regulatory noose tightens around crypto-businesses. While many people chuckled when Ripple was taken to court for selling unregistered securities, the impact on the surviving crypto market had been expected for quite some time. Now that others are suffering, John E Deaton, the founder of Crypto Law, has asked Anthony Pompliano, a member of BlockFi’s Board of Directors, to unite against the cause.

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