Jumping into loans with NEXO, is cryptocurrency lending profitable?

Nexo (NEXO) is an Ethereum platform and token that raises the question is cryptocurrency lending profitable? In detail, Nexo’s platform is one of many attempts to use crypto assets as loan collateral.

Nexo builds its platform around a wallet that lets users borrow against cryptocurrency. Essentially, to borrow all you need to do is deposit crypto assets in the wallet.

In addition, users can earn interest income from funds in the Nexo Wallet. Notably, Nexo claims to pay 6.5% interest on all funds in the wallets.

Thus, the Nexo Wallet looks and operates like a bank account. In fact, Nexo claims Lloyd’s of London and BitGo insure the wallets for up to $100 million.

Is Nexo a Bank and is it legal?

Obviously, Nexo could get into trouble for operating an unregulated bank fast. Thus, I predict banking regulators could ban Nexo or demand Nexo register as a bank.

Moreover, Nexo could be illegal in the United States where the federal government regulates most banks. Additionally, US authorities could force Nexo to offer Federal Deposit Insurance Corporation (FDIC) insurance on its accounts.