The Texas State Securities Board (TSSB) issued a cease-and-desist order against crypto trading and lending platform BlockFi alleging that BlockFi’s Interest Account (BIA) product is a security under state rules.

What Happened

According to a report from CoinDesk, if the order takes effect after a hearing in October, then BlockFi wouldn’t be able to offer its BIA product without first registering with the TSSB. “The BIAs constitute investment contracts, notes, or evidences of indebtedness regulated as securities as that term is defined by Section 4.A of the Securities Act,” stated the TSSB in a filing.

Users that deposit their cryptocurrency into BlockFi’s Interest Account earn over 7% APY with interest accrued daily and paid monthly. The TSSB estimates that BlockFi has at least 25,000 clients in Texas with $691 million in total assets.

Earlier this month, two other U.S. states – Alabama and New Jersey – filed similar notices alleging that BlockFi’s crypto interest product was in violation of local securities laws. BlockFi CEO Zac Prince took to Twitter to assure existing BIA clients that the order would not impact them or any of their investment in other BlockFi products.

“We will continue to engage with all relevant authorities to protect our clients’ interests and expand accessibility to innovative financial solutions for all,” said Prince.

Price Action

As of time of publication, Bitcoin (BITCOMP) was trading at around $34,408. The market-leading digital asset had a trading volume of $19 billion, accounting for roughly 45% of the market at the time of writing.