Nexo, a bitcoin-related digital services provider, has officially relaunched its digital asset services in the US, a strategic move that comes a few months after the company withdrew from the US market at the tail-end of 2022.
Strategic Return to a Major Market
The re-entry of Nexo into the US market comes at a time that is more than three years after the firm exited the US market due to an unfavorable regulatory environment, especially from the federal and state regulators regarding its interest-bearing products. When the firm exited the US market, it engaged in extensive discussions with the regulators before deciding to wind down its operations.
According to Eleonor Genova, the company’s head of communications at Nexo, the decision to relaunch the company was partly driven by better clarity in regulations and the development of U.S. digital asset policies. The revamped version of the Nexo platform will offer its U.S. clients the following:
- Flexible and fixed term yield programs
- Spot Cryptocurrency Exchange Services
- Crypto-backed credit lines
- A loyalty and rewards program
These products are geared towards serving retail as well as institutional investors in search of yield, liquidity, and self-directed digital asset management.
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Compliance Through Strategic Partnerships
An important part of Nexo’s relaunch strategy in the U.S. market has been its association with Bakkt, a digital asset infrastructure provider based in the U.S. Bakkt serves institutional clients, which are important in underpinning Nexo’s trading platform.
Genova pointed out that there will be certain advisory services provided by a third-party Securities and Exchange Commission (SEC)-registered investment adviser, which will ensure that all of Nexo’s offerings are in line with the relevant laws. The new headquarters of Nexo will be located in Florida, which signifies its commitment to institutionalizing its presence in the country.
Regulatory Backdrop and Historical Challenges
Nexo’s initial departure from the U.S. in December 2022 was characterized by extreme regulatory pressures, especially with regards to Nexo’s “Crypto Earn” product, which enabled users to accrue compounded interest on crypto assets lent to Nexo.
The SEC and North American Securities Administrators Association (NASAA) determined that Nexo’s product had not been registered appropriately. As a result, Nexo agreed to a $45 million settlement in early 2023.
At the time, the main reason for the exit provided by Nexo was the lack of a clear regulatory route, as the firm claimed that despite its best efforts at engaging the relevant regulators, there was no viable compliance route for its main products.
Bitcoin remains a central asset on the platform, with renewed institutional and retail interest in BTC-backed lending and yield products shaping Nexo’s US relaunch strategy.
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