Celsius is positioned among the best yield-generating CeFi platform on the market. They are competing with Nexo and BlockFi. Their positioning is seemingly weakened this week, certainly with retail investors, as the platform sent out an announcement to all users and released a public announcement that new funds supplied – even from existing accounts – into Celsius’ platform would no longer be eligible to earn yield unless they are accredited investors.
Let’s look at what we know from today’s release, and the events that have led up to today’s announcement.
Celsius & Regulatory Challenges In The States
Celsius made an announcement via their Twitter channel. Alex Mashinsky, the founder and CEO of Celsius offered similar information. Although neither channel provides much information on the reasons behind the move, speculators have largely attributed it to increased SEC scrutiny.
1/ @CelsiusNetworkWe are launching a Custody Solution for US Users and making some improvements to our services. Read on to learn about what’s changing and why…
— Alex Mashinsky (@Mashinsky) April 12, 2022
In the company’s official blog post on the matter, there was also little clarity on the why behind these changes. These changes are unlikely to have been made on the company’s own. It’s unclear the specific needs to be an accreditted investor on the Celsius platform. VerifyInvestor.com is used by the company, and typically costs $70 per person to verify an application. Celsius appears to be paying for verification. But, how will small-time crypto users get verified? Large questions loom, and it’s likely that many will elect not to even attempt verification. The platform will roll-out it’s ‘Custody’ feature as it’s replacement for swapping, borrowing, and transferring tokens. However, the ‘Earn’ feature was undoubtedly a major drive for Celsius’ existing business.
Celsius provides a native token token that can be used to gain boosted rewards. However, the token has not been made available to U.S. customers. This week, these restrictions seem to be moving forward for customers based in the United States. Source: CEL-USD on TradingView.com | Source: CEL-USD on TradingView.com
Bitcoin Data: Number Of Active Entities Remain In Bear Market Channel| Bitcoin Data: Number Of Active Entities Remain In Bear Market Channel
A Buildup Of SEC Criticism?
In 2017, we reported on numerous cases of regulation being applied to BlockFi, Celsius and other similar entities. The pressure has largely come on a state-by-state basis, and certainly hasn’t been limited to Celsius. However, it seems that state pressures are still a major factor, as Celsius has specified in today’s report that there would still be limitations on availability surrounding it’s new ‘Custody’ product. Impacts of today’s report are limited solely to U.S.-based users.
We will never know where we’ll go.
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