Customers will need to liquidate their accounts before Dec. 19, or agree to automatically migrate their crypto to the Blockchain.com exchange and wallet provider.
If customers don’t take action, SoFi will liquidate their accounts for them, and any proceeds will be deposited into their brokerage accounts.
SoFi will reimburse all fees on crypto sales within 60 days of the transaction.
“We know this is a big change and are here to help you understand your options and transition smoothly,” the company wrote to customers.
SoFi began offering crypto services in 2019, eight years after its founding as a student loan refinancing company and three years before receiving its bank charter in 2022.
SoFi’s bank charter was approved conditionally on a two-year conformance period for its crypto activities, meaning it had to either garner necessary regulatory approvals or to exit the digital assets market entirely.
The bank’s exit comes at a time that the crypto market has been doing comparatively well to the previous 18 months. Morgan Stanley said in a blog post last month that several market signs indicate that the lengthy crypto winter may be over. Digital asset investment advisor CoinShares reported Monday that $346 million flooded into the crypto market last week, marking a ninth-consecutive week of inflows and the largest weekly inflow since late 2021.
But a source with knowledge of the matter told Banking Dive that SoFi's crypto business wind-down made sense, given the heightened scrutiny of banks holding crypto.
Federal regulators made clear in January several concerns they had about bank-crypto ties, and in August the Federal Reserve launched a supervisory unit tasked with scrutinizing of such relationships.
Metropolitan Commercial Bank, long positioned as one of crypto’s traditional finance allies, exited its crypto business in January, acknowledging then-recent developments “in the crypto-asset industry, material changes in the regulatory environment regarding banks’ involvement in crypto-asset related businesses, and a strategic assessment of the business case for MCB’s further involvement.”
Crypto is a non-material business for SoFi, which in the new year plans to transition to a referral model in which it will recommend crypto-interested customers to places outside the bank where the assets can be traded, the source said.
For Blockchain.com, SoFi’s exit represents its gain: hundreds of thousands of customers, and hundreds of millions of dollars, will migrate to Blockchain.com, and a spokesperson for the firm said it’d already seen “tens of thousands migrate in the first hour.”
Blockchain.com was founded in 2011 as a way to track crypto transactions, and expanded to offering digital wallets in 2012. Its exchange platform launched in 2019.
"SoFi choosing Blockchain.com as its strategic crypto partner is a testament to and endorsement of Blockchain.com's unwavering commitment to security and innovative approach to the future of financial commerce," said former Comptroller of the Currency Joseph Otting, who is now an independent director at Blockchain.com. "This collaboration will open new doors and opportunities for SoFi members, providing access to a broad range of digital tokens and advanced trading features."
A Blockchain.com spokesperson said that the firm expects the majority of customers to migrate, given the tax burden that would come with selling potentially large sums of crypto.
“It’s a really big enforcement area for the IRS right now,” Brian R. Harris, tax attorney at Tampa, Florida-based Fogarty Mueller Harris, told BankRate in April. “They’re generating a lot of publicity in going after people who hold, trade or use cryptocurrency. Those people can be a target for audit or compliance verification.”