Responsibility behind the crypto lender’s asset list

Cryptocurrency lenders are institutions that sit between consumers and the untamed, blockchain-based, and often unregulated space of cryptocurrencies. Hence, they occupy a special position when it comes to mission to customers and the assets for which they are serving. Therefore, when choosing currencies, lenders take the lead with a delicate leap of responsibility, a balancing act between satisfying public demand and a sustainable, worthwhile addition to cryptocurrencies, price and security.

Need versus Consent: The Question of Endorsement

It’s no surprise that in an emerging industry full of new investors, a lender’s asset integration is often confirmed as confirmation. What is often overlooked when companies add new assets to their service offerings is that crypto lending is actually a business and any possible integration of assets is only about meeting a need – a good market opportunity that generates profits for the company and the customer equally. Perhaps this is because lenders are influential entities in an area that previously lacked the stamp of institutional recognition and was sought after by pioneers who shaped the industry.

Brian Armstrong will become Coinbase CEO in June 2021 grant a series of tweets about the exchange’s rapid multi-asset integration and its intention to keep that pace. Armstrong wrote that “one shouldn’t consider being listed on Coinbase as an endorsement for that asset,” suggesting the small difference between working with an asset and supporting it. While their operation is different from that of an exchange, the same principle applies to crypto lending institutions: it’s not an endorsement, it’s just a business. And there are ways to create customer-oriented and socially responsible companies.

If it’s not an affirmation, what is it?

Listing a property on a credit platform may not be an endorsement, but it is an indication of some level of legitimacy, stability, and security. Operating a crypto lending company for a particular coin means that it is legally and technically justified to own it, invest in it, and use financial services to do so. Lenders have a lot to lose in dealing with untrustworthy cryptocurrencies, including money, as well as the trust of their customers and the future of their business; As a result, they maintain high standards for the technical durability of their assets, market-wide liquidity, price stability and legitimacy. The due diligence of these companies cannot serve as the seal of approval for investors mentioned above, but it can: a Crypto wind indicator Types that provide a general indication of the stability and safety of an asset without requiring confirmation.

As a result, crypto lenders have become intermediaries for legal action, and it is noteworthy that this complex interdependence works both ways – suspension of services for cryptocurrencies, death, even if there is a possibility of new legal problems with the coin or token. This exact scenario will take place on December 23, 2020 when many major exchanges and crypto lending institutions suspend their XRP services due to a lawsuit filed by the US Securities and Exchange Commission. A valuable lesson is that the immediate response of these organizations to potential legal issues with XRP is a trend towards full compliance, competent legal advice, and willingness to act immediately. In essence, responsible crypto companies are the first reactor in the industry and can be useful for keeping an eye on them while navigating space.

Related: SEC vs. Ripple: A Predictable But Unexpected Development

List and [Insert company name] function

While coin integration on credit platforms does not mean endorsement, the actions of companies still have a strong impact on cryptocurrencies. The largest cryptocurrency exchanges in the world all have the so-called “Coinbase Effect” or “Binance Effect”, which means that newly listed coins increase in value significantly. This is partly because they are suddenly becoming available to a wider investor audience, and partly because their inclusion in these massive exchanges gives buyers a sense of credibility.

A similar phenomenon was observed in 2020 when PayPal announced its plans to partner with Bitcoin (BTC): the news spread quickly and had an overall positive impact on the market. The outstanding example this year is the “Tesla” or “Elon Effect”, which began with Tesla accepting Bitcoin as a means of payment for its vehicles in March 2021 and then withdrawing the opportunity – no, both actions naturally caused waves the crypto industry. A few months later, it was Elon Musk himself who was credited with triggering a market downturn that lasted nearly two months with a single tweet.

Related: Expert Answer: How is Elon Musk affecting the crypto space?

These examples of the impact of non-crypto-native companies on crypto prices are not even exhaustive and describe the impact that big brands can have on the volatile crypto market. They signal the need to be accountable for all companies operating in the blockchain space, especially crypto lenders who are set to become the banks of the new financial system. It is a volatile market with many small investors and new players. In the absence of regulation, the industry has to regulate, recognize and moderate the attractiveness of its listings, investments, statements and even tweets itself.

The technical side of the real estate offer

In general, there are two main approaches to adding new assets to a crypto lending platform. The first is full blockchain integration and the second is a more inward implementation. The former allows users to deposit and withdraw assets in their wallets, which gives them more flexibility overall. The disadvantage is that such integrations take longer, require scarce technical talent, and depend on finding a suitable and trustworthy third party custodian to ensure complete security for the customer’s property at all times.

The alternative to full integration is an approach similar to Revolut’s crypto offering, where users only buy cryptocurrencies and digital assets on the lender’s platform, cannot withdraw them to an external wallet and therefore have no access to their private keys. Behind the scenes, the provider trades assets on behalf of its client and offers a user-friendly representation of crypto investments that can be made on the user’s platform. Cryptocurrency lending is much faster than the standard integration. Although Revolut received criticism from the crypto community that led them to finally roll out a limited bitcoin withdrawal in May 2021, the method has intrinsic value in a field as dynamic as the financial world. friendly model for assets like Polkadot (DOT), Cardano (ADA), Dogecoin (DOGE) and the latest addition from Crypto Solana (SOL).

True to the struggle for ultimate security, the well-known mantra of the crypto community “Your keys are not your money” is a natural obstacle to internal integration. Still, they are strong on Nexo with $ 11, 28, and 12 million in revenue from DOT, ADA, and DOGE purchases, respectively, in the first month since the integrations began. Although it is not possible to preserve one’s wealth, customers use it extensively. People want and need to be exposed to new assets that often crop up in the rapidly growing space. Cryptocurrency lenders simply cannot meet this demand by just using slower and extremely resource-intensive blockchain integrations that give customers more control over the assets, which limits exposure to a lot of new coins and works well.

“Not your keys, not your money” is one of the main advantages of cryptocurrency – the ability to hold and secure your money in your own hands instead of having to trust it. But maybe that phrase gets a little off-putting as cryptocurrency starts to scale rapidly. For lenders and other businesses using in-house asset integration, this strategy should be a stepping stone to full integration, a tool to keep up with the industry, grow the business, and help their clients discover lucrative investment opportunities in a timely manner .

The Way Forward: Social Obligations> Legal Obligations

Ultimately, crypto lenders need to minimize the messages behind their asset listings, wisely consider the words and actions behind their branding, and use built-in methods, various combinations to improve the user experience in dynamic industries. In an environment where there is a lack of common rules and standards due to its origins, many of these actions depend largely on the social responsibility of crypto companies and the social responsibility of blockchain-based companies (CSR).