California regulators have organized officially discontinuing MyConstant’s cryptocurrency lending business. The California Department of Financial Institutions (DFPI) has announced it will crack down on interest rate account providers in the state.
Stricter regulations
As announced by the Department of Financial Protection and Innovation, it has issued an order requiring CONST LLC to cease and desist violating the Securities Act and the California Consumer Financial Protection Act, as well as cease and desist violating the California Investor Protection Act.
In addition to offering various cryptocurrency-related products and services on its online platform, MyConstant also offered a peer-to-peer loan brokerage service, whereby MyConstant would broker loans between consumers whose crypto assets would be secured by the agency.
The DFPI took action against MyConstant for offering peer-to-peer lending services in California, in violation of California law, and ordered it to stop offering these services in the state.
The Department of Financial Protection expects anyone doing business in California and offering securities, lenders or other financial service providers to comply with financial laws.
The DFPI has two main functions: Administration of state banking and credit laws; enforcement of the recent California Consumer Financial Protection Act; and the Administration of State Securities Laws, which specify broker agents, investment advisers, and commodities.
It is important to note that the recent ordinance of the California DFPI is not the first and certainly not the last. Various regulators around the world are trying their best to restrict cryptocurrency-related activities and especially in the United States. However, they have not been very successful so far.
Despite the fact that the actions of the regulators seem to emphasize the importance of supporting customers and avoiding big losses, this cannot be the case with the cryptocurrency market, as it cannot be that useful.
This industry is one where knowledge and education are of the utmost importance. There is a chance to avoid losses if more people and conventional users know the market and its risks. Regulations can’t just help users and, moreover, aren’t as effective when it comes to decentralized marketplaces.
