A few minutes every morning is all you need.
Stay up to date on the world's Headlines and Human Stories. It's fun, it's factual, it's fluff-free.
The backstory: In 2011, SoFi started as a student-loan refinancing platform but gradually expanded its horizons. In 2019, it decided to join the crypto party with SoFi Invest, letting users trade various cryptocurrencies on its platform. The company even went public in 2021.
In a big move last year, the company secured a bank charter, which is essentially getting official permission to operate as a bank. But there was a catch. With the amount of regulatory scrutiny in the industry, it had a two-year window to either get a thumbs-up for its crypto game or exit the scene.
So during this time, SoFi continued making waves in the crypto waters, even though crypto isn’t where it makes most of its money. In fact, financial statements show crypto is more of a side hustle for the platform, bringing in around US$6 million in the three months ending in September. For some context, SoFi's expected to pull US$2 billion in revenue this year, according to Bloomberg.
The development: SoFi has officially decided to bow out of the crypto sector, even though these digital tokens have been doing well lately. The reason? It's feeling the pressure from banking authorities regulating the crypto landscape. In a recent message to crypto customers, SoFi gave them two options – either cash out their accounts or shift their holdings to Blockchain.com before December 19 to avoid liquidation. Starting this Wednesday, the platform will no longer allow customers to open new crypto accounts. The specifics of SoFi’s deal with Blockchain.com are under wraps. But the company also said that next year, it will guide its members to other crypto partners.
"New users of crypto are now skipping the basics in investing, capital allocation and risk management going into low cap tokens such as $DOGE coin or $SAFEMOON without fully knowing the risks and planning to be millionaires overnight," said Jeff Hancock, CEO of Coinpass, to TMS. "People are losing savings, [from] deposits and college tuition [to] not knowing how to properly protect themselves from scams, loss of funds or simply buying into the market at the wrong time."
"[T]he Bank Holding Company Act permits us to continue our current digital assets related offering for a two-year conformance period from the date we became a bank holding company," said a filing by SoFi last year, referring to the bank charter conditions.
"Crypto asset entities might use these in lieu of audited financial statements in order to obscure and confuse customers about the safety of their assets," said the SEC, regarding some exchanges' "proof of reserves" services, in its investor alert issued in March.