Amid increased scrutiny on the banking sector by the Federal Reserve, San Francisco-based SoFi is ending crypto services even after a recent surge in token prices.
U.S.-based users can no longer create crypto accounts, and existing customers have until Dec. 19 to migrate their crypto to Blockchain.com. If a user does nothing, their holdings will be sold, which could create a substantial tax bill.
The terms of the agreement between SoFi and Blockchain.com weren’t disclosed. Still, a spokesperson for Blockchain.com said hundreds of thousands of customers are expected to switch over, bringing hundreds of millions of dollars in crypto.
Those who choose to move over will also get access to advanced services, which include trading in various tokens and the ability to self-custody their crypto to participate in decentralized finance.
“This partnership signifies a pivotal moment in Blockchain.com’s growth trajectory,” Blockchain.com CEO and cofounder Peter Smith said in a statement.
In 2022, SoFi received a bank charter conditional on the company either obtaining the necessary approvals for its crypto business or disbanding it. At the time, the Federal Reserve found that its crypto trading subsidiary, SoFi Digital Assets, was “engaged in certain crypto-related activities that the Federal Reserve has not found to be permissible for a bank holding company.”
According to an SEC filing, SoFi had the option of three one-year extensions as long as the impermissible activities weren’t expanded. At the time, the company warned it could wind down its crypto business “in a short period” and forcibly liquidate customers’ holdings during a down market.
SoFi’s exit from crypto comes alongside increased scrutiny by the Fed. In August, the central bank launched a novel activities supervision program to oversee firms’ activities related to digital assets and blockchain technology.
Crypto trading launched on SoFi in 2019 but has yet to be a significant revenue driver. The company recorded just $6 million in brokerage-related fees (which includes crypto fees) in the third quarter, compared with $9 million for its referrals business.