Cryptocurrency providers are institutions that sit between consumers and the current blockchain-based and often unregulated cryptocurrency space. Thus, they occupy a special position when it comes to accountability towards customers and the assets for which they offer services. Thus, lenders are performing a delicate dance of responsibility when choosing a currency to support, balancing popular demand with the addition of sustainable, decent and safe digital currencies.
Demand versus consent: a matter of consent
Unsurprisingly, in an emerging industry full of new investors, lender asset integration is often used. When companies add new assets to their services, it is usually overlooked that cryptocurrencies are in fact a business, and all asset integration ultimately takes place in response to demand – a good market opportunity that benefits both business and customers. This may be due to the fact that lenders are powerful actors in a room that has historically lacked institutional approval and sought it through the leading companies that make up the industry.
In June 2021, Coinbase CEO Brian Armstrong posted a series of tweets about the exchange’s rapid integration of multiple assets and its intention to keep up with that pace. “No one should take a Coinbase listing as proof of this asset,” Armstrong wrote, noting the subtle discrepancy between working with an asset and approving it. While their business is different from the stock exchange, the same principle applies to cryptocurrency lenders: it’s not authentication, it’s just business. There are many ways to create a customer-centric and socially responsible business.
If you don’t believe, what then?
Placing an asset on a lending platform may not be an endorsement, but an indicator of a certain degree of its legitimacy, stability and security. Lending cryptocurrency in a specific currency means that owning, investing / using financial services to do so is prudent from a regulatory and technical point of view. Lenders have a lot to lose by working with unreliable cryptocurrencies, including money, as well as trusting customers and the future of the business; Therefore, they maintain high standards of asset technical strength, market-level liquidity, price stability and legality. While the due diligence of these companies may not serve as the aforementioned seal of approval for investors, they can be an indicator of a cryptocurrency of one kind or another and provide an overall view of the stability and security of an asset without approval.
And then cryptocurrency lenders pioneered the implementation of regulatory measures, and it should be noted that this complex interdependence is two-way – it immediately suspends the operation of cryptocurrency when new regulatory issues with coins or tokens may arise. This exact scenario was realized on December 23, 2020, when several major exchanges and cryptocurrencies stopped XRP services in light of the US Securities and Exchange Commission’s lawsuit against Ripple Labs. A valuable takeaway is that even the immediate reaction of these institutions to the possibility of legal issues with XRP shows a trend towards full compliance, competent legal advice, and a willingness to take immediate action under certain circumstances. In fact, responsible crypto companies are the first reactors in the industry and can be useful for monitoring when navigating in space.
Related Topics: SEC vs. Ripple: An Expected But Unwanted Development
Ads and effect [insert company name]
While the integration of currencies on lending platforms does not mean approval, the actions of companies still have a strong side effect for cryptocurrencies. The world’s largest cryptocurrency exchange has the so-called “Coinbase Effect” and “Binance Effect”, which cause exponential growth in the value of newly built coins. On the one hand, this is because it suddenly became available to a wider audience of investors, but in addition to that, the inclusion of these stock market giants gives buyers a sense of trust.
A similar phenomenon was observed in 2020 when PayPal announced its plans to work with bitcoin (BTC): the news spread quickly and generally lifted the market. This year, the dominant example was ‘Tesla’ or ‘Elon-Effect’, which began with Tesla accepting Bitcoin as payment for its cars in March 2021 and then withdrawing that option – and of course both actions set off a wave in cryptocurrency. industry. Two months later, of course, Elon Musk triggered a market downturn with his tweet that lasted almost two months.
Related Topics: Expert Answers: How Does Elon Musk Affect Cryptocurrency?
These examples of the impact of local non-crypto firms on cryptocurrency prices are not even close to being exhaustive and visualize the impact that major brands can have on cryptocurrency prices.