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Crypto Exodus: SoFi's Strategic Retreat

Known for its foray into crypto trading back in 2019, the platform is pulling the plug on its digital currency business.

Photo by DDP / Unsplash

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SoFi, a financial services heavyweight, has waved goodbye to the crypto market. The company's dramatic exit comes amid intensifying regulatory scrutiny, prompting a swift wind-down of its crypto operations.

This decision, effective by the end of 2023, marks a pivotal shift in the landscape of financial services firms operating within the crypto space. The company has given its users a three-week heads-up to migrate their accounts to or face automatic liquidation.

SoFi's decision to discontinue crypto services comes amid a tumultuous year for its stock. After peaking at $11.45 in July, SoFi's shares took a downward turn, dipping below $7 in mid-November. It currently stands at $7.79 in after-hours trading, or $0.040 (0.51%) up in the past 5 days.

With regulatory wolves at the door, SoFi's bank charter, granted in January 2022, was hanging by a thread, conditional on receiving a regulatory green light. Faced with a tightening regulatory noose, SoFi's crypto venture had its days numbered.

SoFi's exit, therefore, could be seen as a strategic move to refocus on its core strengths and stabilize its market position​.

ARK's Opportunistic Play

On the flip side, ARK Invest, led by Bitcoin advocate Cathie Wood, capitalized on this development by snapping up a significant amount of SoFi stock, as reported by Cointelegraph.

ARK Invest, known for its forward-looking investment approach, swooped in to purchase approximately $1.5 million worth of SoFi shares. This move was timed with SoFi's announcement, indicating ARK's confidence in SoFi's value proposition beyond its crypto ventures. The purchase added to ARK Fintech Innovation ETF's (ARKF) significant SoFi exposure, now valued around $13 million.

SoFi's crypto exit and ARK's investment maneuvers signify a broader trend in the financial services sector, where firms are reassessing their crypto strategies amidst fluctuating market conditions and regulatory uncertainties. While SoFi steps back, ARK's simultaneous investment in Robinhood, a platform that supports crypto trading, and its divestment from Coinbase, one of the largest crypto exchanges, further highlight the shifting sands of crypto-related investments.

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SoFi's exit from the crypto world is a bellwether of the times. It's a clear sign that when regulators come knocking, even the giants of the industry have to listen.