SoFi Technologies has announced the closure of its cryptocurrency services, giving existing users the choice to migrate their accounts to Blockchain.com or have them liquidated.
SoFi Technologies, a prominent financial technology company, is set to shut down its cryptocurrency services by December 19. The announcement comes as the company aims to comply with regulatory requirements and focus on its core business operations. Existing users will have the option to migrate their accounts to the privately-held Blockchain.com platform or have their accounts automatically closed and liquidated. However, the decision comes with certain considerations and implications for users, including potential tax obligations and restrictions based on location.
Migration or Closure: What Does This Mean for SoFi Crypto Customers?
Existing SoFi cryptocurrency customers will receive an email detailing the migration process. Users who wish to continue using their accounts can opt-in to have their accounts transferred to Blockchain.com. This migration will offer expanded services, such as access to a wider range of tokens, advanced trading features, and enhanced security measures, including the ability to self-custody crypto.
On the other hand, users who prefer to close their SoFi crypto accounts can proactively do so before December 19. On that day, active accounts will be automatically liquidated and closed. Users will receive transaction details via email and can expect proceeds to be deposited into their brokerage accounts within 60 days. However, it is important to consider the potential tax implications of liquidating holdings, as profitable sales may trigger capital gains tax obligations.
Different Rules for Different States and Tokens
While Blockchain.com offers services in most U.S. states, there are certain exceptions. Users in Virginia, Hawaii, Louisiana, New Jersey, Nevada, Tennessee, and Texas will receive services through a partnership with Bakkt Crypto Solutions, and they will need to agree to Bakkt’s terms and conditions. Additionally, specific tokens, including Aave, Stellar, Uniswap, and Polkadot, among others, will be automatically sold during the migration process for customers in certain states.
However, users in the state of New York are not eligible for migration at all. These accounts will remain open until January 28, with trading allowed until the December 19 deadline. From December 19 to January 28, accounts in New York will only be able to sell cryptocurrency and not make new purchases. After January 28, these accounts will be closed and liquidated following the same structure as other users.
Reasons Behind SoFi’s Crypto Exit
SoFi’s decision to wind down its crypto operations has been in the works for the past two years. In January 2022, the company received conditional approval from the Office of the Comptroller of the Currency (OCC) to operate as a bank holding company. However, this approval was contingent on SoFi refraining from engaging in any crypto-related activities or services without OCC approval, as stated in a September 2022 filing. The company has previously emphasized that cryptocurrency is not a significant part of its business.
Conclusion:
SoFi Technologies’ announcement to shut down its cryptocurrency services reflects the company’s strategic decision to comply with regulatory requirements and focus on its core business operations. Existing users have the option to migrate their accounts to Blockchain.com or have them liquidated. However, users should carefully consider the tax implications and restrictions based on their location. SoFi’s exit from the crypto business aligns with its long-term plans and the regulatory landscape, allowing the company to prioritize its primary financial services offerings.
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