(Bloomberg) -- Crypto proponents have argued for years that regulators shouldn’t apply decades-old rules to the burgeoning asset class. But in a move with sweeping implications for the industry, at least one prominent company is now planning to register its offerings with the Securities and Exchange Commission. 

BlockFi Inc. announced on Monday that it’d seek SEC approval for accounts that pay clients high yields for lending out their crypto as part of a record $100 million settlement with federal and state securities watchdogs. The plan would give the Jersey City, New Jersey-based firm the first SEC sanctioned product of its kind, immediately adding pressure on competitors to follow suit.

Companies offering digital-asset lending have attracted tens of billions of dollars in deposits by promising yields that far exceed those available through traditional savings accounts. The SEC under Chair Gary Gensler has frequently warned crypto platforms that they likely need to be registered with the agency or face the prospect of sanctions by the regulator. 

Kristin Smith, the executive director of the Blockchain Association, said her trade group is “committed to working with Washington to establish common-sense guardrails for industry in which to operate.” She called the BlockFi settlement “a step forward toward that goal.”

The SEC and state investigators had been probing whether the accounts offered by BlockFi are akin to securities that should be registered with regulators. Executives at BlockFi have said they are able to pay such high yields to customers because institutional investors will pay them even more to borrow the deposits. Unlike bank accounts, the crypto-interest accounts aren’t federally insured -- something the regulator also warned investors about on Monday. 

As part of the agreement announced by the SEC, current BlockFi customers can continue to earn interest on their existing investments, but the company must not sell the products to new American clients. The company has 60 days to seek to comply with SEC regulations and it’s also seeking to register a new crypto-lending product that will satisfy the agency’s rules.

Zac Prince, chief executive officer of BlockFi, said the company would work with the regulator to comply with its rules. “We intend for BlockFi Yield to be a new, SEC-registered crypto interest-bearing security, which will allow clients to earn interest on their crypto assets,” he said in a statement after the deal was announced. 

Gensler, the SEC chair, said the settlement “makes clear that crypto markets must comply with time-tested securities laws.” He added that the agreement showed “the commission’s willingness to work with crypto platforms to determine how they can come into compliance with those laws.” 

BlockFi agreed to pay a $50 million fine to the SEC and another $50 million to various states. It’s among several companies, including Celsius Network and Gemini Trust Co., that have become wildly popular with retail investors for paying yields that sometimes exceed 10%. The SEC is also scrutinizing Celsius, Gemini and Voyager Digital Ltd. over similar issues, Bloomberg reported in January.

At the time, a Gemini spokeswoman said the company was cooperating with an “industry-wide inquiry” into crypto-yield products. Celsius said it was working with regulators to “operate in full compliance with the law” and a Voyager spokesman said it was routine to be in ongoing communications with watchdogs. The SEC hasn’t accused any of the companies of wrongdoing.

When asked Monday about the implications of BlockFi’s settlement on its business, Gemini declined to comment. Celsius and Voyager didn’t immediately respond to requests for comment.

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