San Francisco-based company SoFi Technologies Inc. is preparing to exit the cryptocurrency industry due to increased scrutiny pressure from banking regulators.
SoFi Technologies Inc. Exiting the Cryptocurrency Industry
The company told crypto customers that they should either liquidate their accounts in the coming weeks or switch to crypto exchange and wallet provider Blockchain.com.
SoFi started 12 years ago as a student loan financing company, has since expanded into a number of other verticals, and received a bank charter in January 2022.
Approval of the charter was contingent on a two-year compliance period for crypto business. The company had to either obtain the necessary regulatory approvals for this or exit the digital asset industry.
In August, the Federal Reserve said it was stepping up its review of lenders' participation in digital assets. FED, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency detailed concerns about the volatile asset class in January.
Additionally, the FED rejected a crypto company's application to become a member.
SoFi, which initially entered crypto in 2019, was a high-profile participant in the industry, even hosting an event at Bitcoin Miami last year.
But it has been a non-significant part of its business, which includes all crypto-related fees, with brokerage-related fees totaling nearly $6 million in the three months ending Sept. 30, according to SoFi's financial statements.
Digital assets held total $139.4 million as of September 30. SoFi is expected to report $2 billion in revenue this year, according to estimates compiled by Bloomberg.
SoFi's crypto customers must switch to Blockchain.com by December 19 or liquidate their coins.
*This is not investment advice.