California Department of Financial Protection and Innovation recently issued a fine to the crypto lending giant Nexo Capital. The platform was fined for issuing approximately 5,456 loans to California users without obtaining a valid license, and for failing to conduct proper risk assessments of borrowers—essentially approving loans without thoroughly examining borrowers' income, debts, and credit history. The final penalty was a $500,000 fine.

According to regulatory investigations, this issue is not recent. From July 2018 to November 2022, Nexo's violations in California persisted. This enforcement action can be seen as a clear signal from regulators to crypto lending platforms—you need to have a license, and you need to implement proper risk controls. No matter how innovative your products are, basic financial regulatory requirements cannot be bypassed.