December 9, 2021

Dutch Banking Giant ING testing Defi Lending Offerings

Based in the Netherlands, international banking giant ING has decided to partner up with the financial markets regulator in the country for venturing into the expanding decentralized finance (DeFi) space. There is no doubt that this is a big move on part of the multinational financial institution, it should also be noted that this proposed offering will not include any volatile cryptocurrencies that currently exist in the market. Annerie Vreugdenhil, the Chief Innovation Officer at ING, announced this new venture during the Singapore Fintech Festival. She applauded the efforts that Singapore appears to be making where the crypto market is concerned. 

Last week, it was announced by the Monetary Authority of Singapore that they had absolutely no intention of imposing a ban on Bitcoin. Moreover, the central bank in the country has also taken a very open stance towards stablecoins as well as other digital assets that exist in the crypto space. Vreugdenhil further talked about the product and said that other countries work with the sandboxes that regulators have developed. She added that they now have one in Amsterdam and were going to work with the regulator for an initiative on DeFi and P2P lending.

The Authority of Financial Markets (AFM) will provide the sandbox that ING will use for testing a decentralized finance lending product. The sandbox allows companies to test innovative financial products without having to first deal with the extensive and strenuous process of getting regulatory approval. A proposal hasn’t been issued to AFM by the bank as yet, but it has mentioned that there will be no cryptocurrencies involved and even went as far as calling these digital assets as ‘volatile’. According to Vreugdenhil, these offerings will enable users to develop a peer-to-peer lending option without having to use any virtual currencies, such as Bitcoin. 

The crypto space has a number of DeFi lending platforms and the most popular one that exists today is Aave. People can use the Aave platform for borrowing different cryptocurrencies as stablecoins. However, crypto has to be given as collateral to the platform in order to lend these assets. It should also be noted that when it comes to crypto DeFi lending, it is necessary for people to overcollateralize before they can take loans. This is primarily because cryptocurrencies are volatile in nature. 

Earlier this year, a whitepaper had been published by ING where it stated that the DeFi lending services that Aave was offering were borderless as well as efficient. However, it was also noted by the banking institution that bringing real assets into the decentralized finance space was a major challenge. Now, it appears that ING has decided to venture into the space itself and will now be testing this offering with the sandbox that AFM is offering. This has become a common practice and many are using sandboxes provided by regulators for coming up with new products in the crypto space. 

As far as the DeFi space is concerned, it has experienced exponential growth in the last year and has become a hotspot for new ventures. 

Leave a Reply

Your email address will not be published. Required fields are marked *