State Crypto Lending Concerns Point To SEC Action Ahead


By John Reed Stark (October 22, 2021, 11:41 AM EDT) — New York state is the latest jurisdiction to inject itself into the growing mix of states outlawing cryptocurrency lending programs — and the U.S. Securities and Exchange Commission cannot be too far behind.

In typical cryptocurrency lending programs, though they can vary:

A decentralized finance, or DeFi, platform user deposits or invests cryptocurrency with the DeFi platform;

The DeFi platform pools the cryptocurrency from that investor with other investors;

The DeFi platform lends that cryptocurrency to other Defi customers who pay interest;

Profits or losses on the program depend on the platform’s skill and expertise in investing the loaned cryptocurrency; and…

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