Nexo's Stance on US State Regulators' Cease & Desist Letters Regarding Our Earn Product
We have been working with US federal and state regulators and understand their urge, given the current market turmoil and bankruptcies of companies offering similar products, to fulfill their mandates of investor protection by examining past behavior of providers of earn interest products.
Nexo has always been dedicated to running a sustainable and compliant business and welcomed, even proactively sought, regulatory clarity. Since the SEC guidance on earn products, dubbed “The BlockFi Order” in February 2022, Nexo has voluntarily ceased the onboarding of new US clients for our Earn Interest Product as well as stopped the product for new balances for existing clients.
Nexo is committed to finding a clear path forward for the regulated provision of products and services in the US, ideally on a federal level.
As the recent months have clearly underlined, Nexo is a very different provider of earn interest products, as showcased by the fact that it did not engage in uncollateralized loans, had no exposure to LUNA/UST, did not have to be bailed out or needed to resort to any withdrawal restrictions.
Does Nexo Really Offer 36% Interest on Assets?
Our rates for the overwhelming majority of the assets are in the single-digit percentages. When it comes to the most popular assets, including Bitcoin, Ethereum, and stablecoins, we offer balance limits, where customers earn a lower yield above certain amounts. Our rates are always determined with the underlying sustainability of our business and security of customer assets in mind. An overview of the latest changes to our Earn Interest Product is available here where it is shown that interest rates for Bitcoin, for example, are nominal and vary between 1.5% and 7%.
We do pay interest rates as high as 36% for one asset only, Axie Inifinity’s $AXS where the current staking reward is nearly 60%. This rate, however, is an exception, and we do not advertise the percentage in our marketing materials.