ANALYSIS: BlockFi Reminds Cryptos to Mind the Federal-State Gap

A pile-on of state securities regulators reminiscent of a Southeastern Conference football game occurred over three days in July, when crypto financial services company BlockFi Inc. was blitzed with enforcement actions for violations of securities laws in New Jersey, Alabama, and Texas. Meanwhile, another SEC—the Securities and Exchange Commission—sits on the sidelines.

These actions—and, in the SEC’s case, inaction—reinforce an obvious lesson: State governments and the federal government have different securities laws, administered and enforced separately, and crypto businesses must bear in mind the need to address the concerns of regulators at both levels.

BlockFi and the Three State Securities ...