Today I want to talk about the crypto-loan market. After the cascading bankruptcy of leading platforms such as BlockFi, Celsius and the Genesis division, many thought that this segment would never recover. However, there is now a revival, but in my opinion, the construction of a new crypto lending market should be based on new principles.
As you know, loans appeared along with money. Whether it be cocoa beans, shells or golden guilders, credit relations have always been one of the drivers for the financial system development.
Just recently, it seemed that Bitcoin would harmoniously integrate into the credit market. The peak fell in the years 2020-21, with tens of billions of dollars flowing into both centralized and decentralized lending platforms. However, a series of crashes in 2022 effectively buried the crypto lending market.
There is nothing surprising. This has happened more than once in traditional credit markets. Let us remember the “Great Depression,” when for several years there was no time for loans at all, because the vast majority of banks went bankrupt, and then for another ten years it was mainly the state that provided loans.
That's what I'm driving at. The traditional banking system has an ultimate creditor (for the USA this is the Federal Reserve System) which, in the event of crisis situations, takes certain measures to stabilize it.
Why not do something similar in the crypto industry? Create a single body that, of course, will not be subordinate to any state, but will be something like the Federal Reserve System.
How can it work? Well, for example, one representative from each major player will be included in the council. Startups with a smaller turnover can choose their representatives. In general, organizational issues are not the main thing here; they can be worked out.
The main thing is that the platform can develop general rules for the industry without waiting for a decision from legislators (this can be expected for years, but time requires making prompt decisions). Perhaps crypto companies will submit certain reports to this single body, which will monitor the state of affairs and respond quickly if a crisis situation arises. Participants will probably have to pay fees. You can't do without it :)
In general, I think the crypto community should work on this idea. The development of general rules, and if they also show their effectiveness, can become a guide to action for legislators in many countries.
#CryptoLoan #NewPrinciples #cryptoindustry
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