Online bank and financial services company SoFi Technologies (SOFI) has announced it will be exiting the cryptocurrency industry over the next few weeks. The decision, which obeys the increasing regulatory industry, was announced to crypto customers on Wednesday.
SoFi, which had a net revenue of over $537 million according to its Q3 financial report, was one of the biggest names to operate with digital assets like crypto up to this point. Public documents show that SoFi held over $139 million in crypto assets up to September 30 of this year.
The crypto holdings and accounts will be transferred to Blockchain.com if customers choose not to liquidate. While this means that mass liquidation won’t necessarily be the result, the announcement represents a hard hit for the cryptocurrency industry, which has found it difficult to legitimize itself amid a regulatory crackdown and a lack of regulatory clarity.
Customers Transition to Blockchain.com: What to Know
SoFi struck a deal to transition its crypto customers to leading cryptocurrency company Blockchain.com. The platform was chosen by the SoFo team due to Blockchain.com’s “long-standing work in the cryptocurrency industry”, the “intuitive user experience” it provides, and its “abundant educational resources”.
Existing customers will be able to opt in on the transition from the SoFi web or mobile app, with the rest of the process taking place automatically. If customers don’t opt in or don’t accept the migration by December 19, all of their cryptocurrency assets will be liquidated automatically by SoFi.
SoFi’s decision to migrate the accounts of all customers who opt in means that these users will be able to buy, sell, swap, and hold their assets in Blockchain.com’s platform. It looks like there won’t be any losses on this one.
However, due to the existing restrictions in Blockchain.com, some users might lose their ability to operate with certain coins. In the same way, customers who migrate will also gain immediate access to additional coins, Blockchain.com’s Visa Card, and many other features.
Mounting Regulatory Pressure
SoFi’s departure from the crypto space comes at a time when U.S. regulators are stepping up their oversight of crypto.
More recently, this crackdown saw Binance’s founder Changpeng Zhao pay a $175 million bond to avoid jail, with Binance itself facing up to $4.3 billion in fines. Other exchanges like Kraken have also come under fire from regulators, prompting its founder Jesse Powell to warn about incoming threats to the industry.
SoFi received a national bank charter back in 2022, which required the financial giant to receive the necessary licenses to operate its cryptocurrency business. After finding itself unable to meet the requirements, SoFi opted to progressively stop its cryptocurrency-related services instead of opting for a one-year extension.
A SEC filing by SoFi earlier this year stated that the potential need for “additional regulatory permission” would result in “additional costs on our business”, which in turn would “impair” the company’s “ability to generate revenue”. According to the filing, such a risk would have increased significantly “where regulators adopt a substantial number of new rules in a short time frame”, which was the case.
Crypto’s Neverending Path to Mainstream Adoption
SoFi’s exit is yet another roadblock on cryptocurrency’s road to mainstream adoption. Pew Research Center found earlier this year that 88% of all Americans who had heard about Crypto were not confident about its safety and reliability. The fall of various crypto giants like FTX, Celsius Network, and Sam Bankman-Fried has further eroded trust in crypto.
The regulatory crackdown, however, has failed to stop the cryptocurrency market from recovering over the past year. According to CoinGecko data, the market capitalization is currently sitting close to the $1.5 trillion mark, almost 100% higher than at the beginning of the year.