Crypto lending

What Is Crypto Lending?

DeFi lending is entirely permissionless (unlike CeFi lending) which means there’s no KYC verification to lend or borrow crypto. This makes DeFi protocols comparatively more open than their CeFi counterparts, as anyone with an internet connection can partake. They’re also trustless, in that you don’t need to trust people to run the service as expected; you (or a knowledgeable expert) can manually audit its code before you commit any funds. However, remember that if a coding bug or group of hackers breaks the platform’s code, its developers aren’t financially liable for your lost funds. Lending crypto As with traditional secured lending arrangements, lenders benefit from the comfort provided by taking security over digital assets, many of which can be liquidated for fiat currency with minimal cost and administrative expense if the crypto assets securing the loan have an active and liquid market.

Lending bitcoin

Bitcoin & Blockchain Technology Is Crypto Lending Safe? In June, with the broader crypto market still rattled by the fall of TerraUSD, Celsius halted withdrawals from hundreds of thousands of accounts, citing “extreme market conditions.” The news sent cryptocurrency prices tumbling.

Is crypto lending safe?

“We charged Nexo with failing to register its retail crypto lending product before offering it to the public, bypassing essential disclosure requirements designed to protect investors,” said SEC Chair Gary Gensler. “Compliance with our time-tested public policies isn’t a choice. Where crypto companies do not comply, we will continue to follow the facts and the law to hold them accountable. In this case, among other actions, Nexo is ceasing its unregistered lending product as to all U.S. investors.” What is crypto lending? “We are not concerned with the labels put on offerings, but on their economic realities. And part of that reality is that crypto assets are not exempt from the federal securities laws,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “If you’re offering or selling products that constitute securities under well-established laws and legal precedent, then no matter what you call those products, you’re subject to those laws and we expect compliance.”

Lend crypto

But let’s be honest. The reason why investors are attracted to crypto lending in the first place is the incredibly high APY rate. APY rates for certain cryptocurrencies can go as high as 25%. Think about that for a second. You’re guaranteed a 25% annual growth on top of the potential speculative rise in your cryptocurrency’s value. What’s not to love about that? Types of Crypto Lending and DeFi Platforms Crypto lending platforms are eager for you to use their services and hold assets with them. Many offer a range of crypto lending accounts — often called “earn” products — to entice you to make deposits or lock up your crypto or stablecoin in exchange for higher yields than you’d find on a traditional savings product.

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