SoFi struggling, President Biden extends student loan payment freeze – crypto.news
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Recent reports indicate that the SoFi network has been experiencing declining revenue and financial problems. The struggles are mainly due to the White House’s student loan freeze. Additionally, SoFi is currently facing some regulatory issues initiated by US senators.
SoFi income will decrease when student loans are frozen
SoFi, a US online banking company, is experiencing financial pressure, especially after the Biden administration froze student loan payments. President Joe Biden’s administration put student loan repayments on hold at the start of the Covid pandemic to help students get through tough times. This freeze was supposed to end in December of this year.
The Biden administration reportedly extended the loan freeze until June 2023.
Freezing the debt payment means that the banking service company SoFi lost one of its main income from student loans, the interest. Simply put, during the next six months at least, student loan income will not be available to SoFi.
This news comes at a terrible time for SoFi, as the crypto market is already struggling to survive following the sudden collapse of the FTX crypto exchange. However, SoFi has already clarified that they have no exposure to FTX. SoFi Twitter thread says in part: “We have no direct exposure to FTX, FTT token, Alameda Research or Genesis.”
SoFi regulatory issues
In addition to financial problems, SoFi also faces problems from federal regulators. Earlier this week, a group of Democratic senators sent a letter to Michael Barr, the Federal Reserve’s vice chairman for oversight, Michael Hsu, Acting comptroller, and Martin Gruenberg, chairman of the Federal Deposit Insurance Corp.
Four senators, Sherrod Brown, Jack Reed, Chris Van Hollen and Tina Smith, warned that SoFi’s virtual asset trading could violate regulatory requirements. The senators wrote;
“SoFi’s digital asset operations pose significant risks both to individual investors and to safety and soundness…Given these significant risks, the Fed, the FDIC and the OCC must ensure that SoFi complies with all consumer financial protection and banking regulations.”
The senators also sent a letter to SoFi CEO Anthony Noto urging the bank to comply with the US Banking Act. The letter states;
“We are concerned that SoFi’s continued unauthorized operation of digital assets is an indication that it has not taken seriously its statutory commitments and compliance with its obligations.”
FTX errors cause problems for crypto usage
SoFi does not engage in any other crypto-financing activities other than allowing members to buy and sell virtual assets on its platform. Recent regulatory attacks on SoFi appear to be on the rise due to mistrust of the FTX exchange in the crypto world. FTX issues have affected crypto projects.