Crypto lenders are the intermediaries between consumers and the wild, unregulated, blockchain-based world of cryptocurrency. As such, they find themselves in an unusual situation about their customers and the assets they provide services. As a result, when it comes to choosing which currencies to support, lenders perform a delicate act of responsibility. They combining public demand with the addition of sustainable, desirable, and secure cryptocurrencies.
Demand vs. approval: The endorsement debate
In a nascent industry brimming with new investors, a lender’s asset integration frequently seen as a stamp of approval. When businesses add new assets to their portfolios, crypto lending is a business, and any asset integration. A good market opportunity that benefits both business and clients. Perhaps this is because lenders are powerful organizations in an industry that historically lacks institutional validation and seeks it through pioneering firms.
Coinbase CEO Brian Armstrong tweeted in June 2021 about the exchange’s quick integration of different assets. Its commitment to maintain this pace. Armstrong stated that “one should not view inclusion on Coinbase as an endorsement of that asset.,” highlighting the subtle distinction between working with and endorsing an asset. While their activities differ from an exchange, the same idea applies to crypto lenders: This is not an endorsement; it is simply business. Additionally, there are other strategies for developing client-centric and socially responsible firms.
What if there is no endorsement?
While listing an asset on a lending platform does not constitute an endorsement, it does indicate a degree of credibility, stability, and security. The actions of a crypto lender concerning a particular coin imply that holding it, investing with/in it, and utilizing financial services for it are both regulatory and technically sound. Lenders stand to lose a great deal by working with unreliable cryptocurrencies. Including their clients’ trust and the future viability of their business; as a result, they maintain stringent requirements for an asset’s technical robustness, market-wide liquidity, price stability, and legality. While these companies’ due diligence cannot function as the stamp above of approval for investors, it can serve as a type of crypto wind indicator, indicating an asset’s stability and safety without supporting it.
With crypto lenders immediately discontinuing services for cryptocurrencies if new regulatory concerns arise with a coin or token. Thus, crypto lenders have become an important barometer for regulatory action. This identical scenario occurred on December 23, 2020, when numerous large exchanges and crypto lenders suspended their XRP services in response to Ripple Labs’ SEC lawsuit. The important point is that these institutions’ early responses to the likelihood of legal concerns with XRP reflect a penchant for full compliance, competent legal counsel, and a willingness to act quickly in response to changing circumstances. Essentially, reputable crypto enterprises serve as the industry’s first reactors and are worth keeping an eye on as you navigate the field.