Loan market is one of the oldest and powerful market in the FIAT world. And this market has both white and gray side. The white side is where you have the big companies that are kind of keeping track of you in a centralized way. To avoid this a lot of people have moved to the decentralized finance.
Crypto too has it's own lending finance system where they offer the loan for borrow and lending system in a DeFi market. Here however you are forced to keep your wallet with the crypto balance on hold before they can get the funds sorted when you are doing the lending and borrowing in their market.
Recently Australian fintech named Block Earner started giving out the loans on the basis of the crypto. However the court which issued the warning and also the asked the fintech company to get a license. So in this post I wish to discuss this case.
Case of Australian Securities & Investments Commission and Block Earner
Just like how USA has the SEC, there is an ASIC in Australia. And they keep an eye on the governance and the regulation side of the economy. And they are also keeping an eye on the blockchain and the crypto market. Fintech company named Block earner was giving the interest on the funds that was kept in their exchange wallet. And there was also the system for the borrow and lending.
Block Earner is a Fintech company where they have the finance model where they can give the lending and borrowing system. You can keep the crypto for the lending or the borrowing through the DeFi. Which is currently was under question and the govt in the Australia put this onto a court case on which they even released the verdict too. You can check the case here.
Verdict on Block Earner in Short
As you can go through the document which is very big and we can get the short points out of the court verdict. This verdict would tell you that it is going to be in the path of the centralization. And the court verdict seems to have no issues on the cryptocurrencies which are used for the collateral or even given in loan format.
Like say USDC, BTC, ETH and Paxos gold are in the question here by the verdict. But they are asking the companies to get proper license system and do the further work. Which is something expected from the fintech. Because you just can't open company, do some random crypto company work and then force the govt to figure things out for compliance.
ASIC media covered this in short here
FinTech Startups Should Show Transparency
USA has plenty of startups which have built the product first and then made the govt to find out the compliance and then they also paid the fines. And this means there is some sort of the issue that is happening lately with the compliance in the govt space. So startups are just skipping the regulation blindly and then later facing the problems like this.
This trend is in Australia, Asian side and also in EU too. Where startups just produce the system and then make the consumer and the govt follow the compliance and regulation and then debate about it in the market. Which goes to show you that in order to build transparent and compliant product you have to approach govt first for fintech.
Block Earner is forced to take up a license now that they have offered the Borrow and Lending system. However as the times are changing govt is adjusting to the violations and not blanket banning the services. This goes to show that there is a future for the crypto lending and borrowing services in near future.
Posted Using InLeo Alpha