Crypto Enforcement Targets Interest Products, Unlicensed Money Transmission

On July 12, the California Department of Financial Protections and Innovation (DFPI) announced it is investigating multiple companies nationwide that offer customers interest-bearing crypto-asset accounts, which allow customers to lend crypto assets to the company in exchange for interest paid in crypto. DFPI warned that many of these account providers may not have adequately disclosed risks customers face when depositing in these accounts, and that unlike banks and credit unions, these providers are not required to have deposit insurance. DFPI also noted that "due to market conditions," some of these companies are preventing customers from withdrawing from and transferring their accounts. DFPI is looking into whether the providers are violating laws within its jurisdiction.