The responsibilities behind the listing of crypto lenders’ assets

Crypto lenders are institutions located between consumers and the untamed, blockchain-based and generally unregulated cryptocurrency space.So they are in a special position when it comes to responsibility To their customers and the assets they provide services. Therefore, when choosing which currencies to support, lenders will lead a subtle dance of responsibility, striking a balance between meeting the needs of the public and adding sustainable, valuable and safe cryptocurrencies.

Requirements and approvals: the issue of endorsement

Not surprisingly, in an emerging industry full of new investors, the consolidation of lenders’ assets is often seen as an endorsement. When a company adds new assets to its scope of services, it is often overlooked that crypto lending is actually a business, and any asset integration is ultimately a response to demand-this is a benefit for businesses and customers Good market opportunities, the same. Perhaps this is because the lender is an influential entity in a field that has historically lacked institutional approval seals, but is looking for it through pioneering companies that have shaped the industry.

In June 2021, Coinbase CEO Brian Armstrong release A series of tweets about the exchange’s rapid integration of multiple assets and its intention to maintain this pace. Armstrong wrote that “listing on Coinbase should not be regarded as an endorsement of the asset”, which shows that there is a slight difference between the use of the asset and the endorsement of the asset. Although their operations are different from those of exchanges, the same principle applies to crypto lenders: it’s not an endorsement, it’s just a business. There are many ways to create a customer-centric and socially responsible enterprise.

If it is not recognition, what is it?

Listing assets on the lending platform may not be an endorsement, but it demonstrates its legitimacy, stability and security to a certain extent. The operation of a crypto lender to use a given coin means that owning it, investing in it/investing in it, and the financial services that use it are all regulatory and technically reasonable. Lenders have suffered heavy losses due to the use of unreliable cryptocurrencies (including funds and the trust of customers and the future of the business); therefore, they maintain high standards for the technical robustness, market liquidity, price stability and legitimacy of their assets.Although the due diligence of these companies cannot serve as the investor’s above approval seal, they can be a Encrypted wind indicator Type, providing general instructions for the stability and safety of assets without endorsement.

Therefore, crypto lenders have become the leader in regulatory actions. It is worth noting that this intricate interdependence is two-way-even if new regulatory issues with coins or tokens may arise, cryptocurrency services will be immediately suspended.This exact scene took place on December 23, 2020, when Multiple major exchanges and cryptocurrency lenders Stopped their Ripple Services for the U.S. U.S. Securities and Exchange Commission’s lawsuit against Ripple LabsThe important point is that the immediate response of these institutions to possible legal issues with XRP shows that they tend to be fully compliant, competent legal counsel, and are ready to take immediate action based on specific circumstances. Essentially, the responsible cryptocurrency company is the industry’s first reactor and may be helpful when navigating the space.

related: SEC and Ripple: predictable but unwelcome development

List and [Insert company name] Influence

Although the integration of tokens on the lending platform does not mean endorsement, the company’s actions still have a strong collateral effect on cryptocurrencies. The world’s largest cryptocurrency exchanges have their own so-called “Coinbase effect” and “Binance effect”, which leads to a substantial appreciation of newly listed tokens. On the one hand, this is because they are suddenly available to a wider range of investors, but in addition, these exchange giants include them to give buyers a sense of credibility.

A similar phenomenon was observed in 2020, when PayPal announces its operational plan Use Bitcoin (Bitcoin): The news spread quickly, generally Refreshing effect in the market.This year, the main example is the “Tesla” or “Elon effect”, which is Tesla accepts Bitcoin payments Vehicles in March 2021, then Take back this opportunity — Needless to say, these two actions have caused ripples in the encryption industry.A few months later, Elon Musk himself can be said to have caused a market downturn that lasted for nearly two months. A tweet.

related: Expert answer: How does Elon Musk affect the crypto space?

These examples of the impact of non-crypto local companies on crypto prices are not even exhaustive, depicting the influence of big brands in the turbulent crypto market. They show that all companies operating in the blockchain space need to take responsibility, especially for cryptocurrency lenders who will become banks of the new financial system. This is a turbulent market with many smaller retail investors and new participants. In the absence of supervision, the industry must self-regulate and recognize and adjust the severity of its listings, investments, statements, and even tweets.

Technical aspects of listed assets

Generally speaking, there are two main methods for adding new assets to crypto lending platforms. The first is a complete blockchain integration, and the second is a more internal-oriented implementation. The former enables users to deposit and withdraw assets from their wallets, giving them greater overall flexibility. The trade-off is that this integration takes a little longer, requires scarce technical talents, and relies on finding suitable and reliable third-party custodians to ensure the complete security of assets.

The fully integrated alternative is similar to Revolut’s crypto products, where users can only purchase cryptocurrencies and digital assets on the lender’s platform, and cannot withdraw them to an external wallet, so they cannot access their private keys. Behind the scenes, vendors process assets in the name of their customers and implement crypto investments on crypto lenders’ platforms faster than standard integration, thereby generating user-friendly investment opportunities.Although Revolut was criticized by the crypto community, this prompted them to finally Launch of limited Bitcoin withdrawals In May 2021, this method has inherent value in a dynamic space like blockchain finance, which is why lenders like us are very responsive to Polkadot (DOT), Cardano (Have), Dogecoin (dog), and the newly added Solana (SOL).

To truly fight for the ultimate security, the well-known slogan of the crypto community “not your key, not your coin” is a natural obstacle to internal integration. In any case, within the first month of launching these integrations, their sales on Nexo were $11, $28, and $12 million, respectively, from purchases from DOT, ADA, and DOGE. Although they cannot keep their assets on their own, customers still use them extensively. People want and need access to new assets that are regularly emerging in a rapidly growing space. When only using the slower and extremely resource-intensive blockchain integration gives customers more control over assets, crypto lenders simply cannot meet this demand, thus limiting access to many novel and well-performing coins.

“Not your key, not your coin” embodies a basic benefit of encryption-the opportunity to take the custody and security of funds in your own hands, without having to trust institutions. However, as cryptocurrencies begin to rapidly scale up, this sentence may become slightly simplified. For lenders and other companies that use internal asset integration, this strategy should become a springboard for full integration, in this way to keep up with the industry, develop business, and provide customers with timely access to profitable investment opportunities.

The way forward: Social Responsibility> Legal Obligations

Ultimately, crypto lenders must lighten the information behind their asset lists, carefully weigh the words and deeds behind their brands, and use different integration methods to enhance their users’ experience in a dynamic industry. In an environment lacking regulations and common standards due to its birth, many of these actions mainly depend on the social responsibility of crypto companies and blockchain-based corporate social responsibility (CSR).

This may include: 1) Actively develop encryption regulations, as we have seen industry leaders do The pending U.S. infrastructure bill2) Audit the reserves as Nexo did through Armanino with real-time proof; or 3) Educate customers-through articles, meetings to ask me any questions, support groups, and even Metaworld-about the assets they use , The services they provide and how to use them safely and profitably.

Developing and unclear regulation is an unsolved problem in most industries. Therefore, the new value behind cryptocurrency lenders and blockchain companies that have assumed more social responsibility and self-regulatory roles from the beginning is that it is possible to create a more refined ecosystem between customers, companies, and regulators. Healthier relationships. As crypto companies have evolved from start-ups to institutions with important positions in blockchain and other fields, these self-discipline and socially conscious service principles have paved the way for an ethical and morally guided financial world, not just The world of finance based on profits and legal obligations.

This article does not contain investment advice or recommendations. Every investment and trading action involves risks, and readers should research on their own when making a decision.

The views, thoughts, and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Magdalena Christova Is Nexo’s public relations manager. With her penchant for writing and natural curiosity about any technically complex things, and the ability to cause ripples in the existing industry, she started working as a copywriter in the encryption industry, and then moved to a new field of encrypted communication.