Nexo Crypto Products Are Being Phased Out in America. Will Others Follow?

  • Nexo (NEXO-USD) is pulling its services from the U.S. market.
  • The company says the decision comes after months of fruitless conversation with regulators.
  • Without consistent regulations, other crypto companies may follow this lead.
NEXO crypto - Nexo Crypto Products Are Being Phased Out in America. Will Others Follow?

Source: FellowNeko / Shutterstock

America’s lack of regulatory clarity in crypto is catching up to it. Millions upon millions have been robbed from investors as rug pull scams are allowed to run wild. Hackers are draining even more through exploits. Tax laws remain confusing an unclear, all while the Internal Revenue Service (IRS) is cracking down hard on those who didn’t file correctly. All of these factors and more are hindering a market the U.S. could be leveraging for its own benefit. But instead, companies are beginning to simply close up shop in America. The newest to flee the States is DeFi servicer and NEXO crypto producer Nexo (NEXO-USD).

Nexo is one of the world’s leading crypto lenders. The U.K.-based company is one of the few who weathered the storm of volatility throughout this year quite well. And while the company has come under fire for some of its practices in the past, it remains one of the most popular options for on-chain custody.

However, American users will not be able to utilize Nexo’s services in the near future. The company has announced on Monday plans to phase out its products and services for American customers.

The decision comes after 18 months of conversations between Nexo and U.S. regulators. These conversations, according to Nexo, have “come to a dead end,” motivating its decision to leave. It adds that regulators have kept “inconsistent and changing positions” on the market. It adds the company cannot promise to users that these regulators are operating in investors’ best interests. This week, it will begin this process by closing U.S.-based sign-ups for its Earn Interest product. It will then phase out existing users’ access state-by-state.

Others May Follow NEXO Crypto and Leave the U.S.

The decision for Nexo to pull its NEXO crypto services from the States is not necessarily a surprising one. It’s certainly not the first case of a company choosing to leave U.S. customers out of its operations. Might other companies follow Nexo’s lead?

To find another example of a company that doesn’t want to deal with U.S. regulators, one only need look at the largest crypto company in the world. Binance (BNB-USD), the biggest name in crypto trading, operates in almost every country in the entire world — except for the U.S. Yes, America is one of of just seven countries where Binance does not operate, alongside the likes of Iran, Yemen and North Korea.

American investors using Binance are actually using Binance.US, a sibling company to Binance with its own executive team and completely independent operations from the global Binance. In 2019, the U.S. made a knee-jerk decision that Binance was hosting unregistered securities on its exchange. The company, after an already tumultuous relationship with regulators, booted U.S. users and created Binance.US to deal with these regulators themselves. Since then, Binance.US has been the entity tasked with dealing with whatever sudden decision regulators have made about any given project.

Indeed, Nexo’s decision follows a string of companies who have chosen to serve everybody except for the U.S. And, much like Nexo, most of these companies have made their decisions due to the lack of regulatory clarity in the country when it comes to crypto. Even the disgraced FTX had a U.S. branch separate from its main company because of regulatory issues. It seems without any regulatory framework, the U.S. is fumbling its chances of wooing top companies to the States.

On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.

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