The regulatory framework for digital assets is shifting, creating anxiety among crypto firms and users operating in the sector. Crypto.com, one of the largest cryptocurrency exchange platforms globally, has announced that it will give users in restricted countries up to March 15 to repay their cryptocurrency loans.
Regulators have been keen on lending products, and this was seen last year when the US Securities and Exchange Commission (SEC) barred Coinbase from launching a lending product.
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Crypto.com gives users in restricted countries a week to repay loans
Crypto.com has expanded the list of the restricted countries whose users will be affected by this new policy. The exchange will now include the United States, United Kingdom and 38 other countries in the restrictions.
The exchange has already started sending out emails to the users based in these restricted countries urging them to settle their obligations. Users based in European countries such as Germany, UK and Switzerland have shared emails of the notice. The exchange has also sent out notices to users that do not hold loans on the platform.
“Dear Valued Customer, please be informed that Crypto Credit is no longer supported in your jurisdiction. For this reason, we must cancel your current loans. Kindly take the steps to repay your loans by 02:00 UTC, March 15 2022. Outstanding loans and the associated interest will be automatically repaid,” the email read.
As per this email, users who fail to pay their loans by March 15 will have their collateral sold by the exchange and their loan positions closed. This unexpected change in the exchange’s policies has created confusion among the exchange users, with some saying that it could be associated with an increased expense from the exchange’s advertising and marketing strategies.
Crypto.com has invested heavily in marketing strategies over the past year, with the latest marketing effort being the purchase of an ad during the Super Bowl. The marketing techniques raised questions because the exchange does not have a large trading volume, and it has not raised a high amount of capital from its investors.
The marketing budget of the exchange has raised eyebrows for a long time, and the sudden and unexpected change in its lending policy has made the crypto community more sure that the exchange was suffering under the weight of the cost-intensive marketing strategies.
Regulatory framework for crypto lending products
Regulatory bodies have increased their scrutiny over cryptocurrency lending products. As aforementioned, the SEC blocked the Coinbase lending product, with the regulator threatening to sue the exchange if this product was launched. Coinbase halted the launch and ventured into other areas, including launching an NFT marketplace.
Crypto firms that have already launched lending products have also faced heavy fines, with regulators claiming they have violated securities laws. Gemini and Celsius provided lending products that came under the radar of the SEC. Last month, BlockFi was penalized $100 million for offering an unregistered crypto lending product.
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