The international banking giant plans to test its own DeFi lending project by using the Authority of the Financial Market (AFM) Sandbox, a regulatory gateway for innovative financial products.
P2P Lending In DeFi Setup: CIO
Speaking at a panel discussion at the Singapore Fintech Festival, ING’s Chief Innovation Officer, Annerie Vreugdenhil, discussed the upcoming DeFi initiative in the Netherlands. She announced that the firm is working on a peer-to-peer, DeFi project on a trial basis, in collaboration with the Netherlands Authority for the Financial Markets.
According to Vreugdenhil, the bank plans to test its DeFi project under the AFM Sandbox protocol, which will provide a loophole that allows new businesses to innovate in the space without much regulatory oversight.
“In other places, we work with sandboxes that regulators have. We actually have in Amsterdam now an initiative on DeFi on P2P lending where we are starting to work with the regulator.”
DeFi Without BTC
The conversation steered into the cryptocurrencies that would be supported by the DeFi protocol. Despite admitting that BTC demonstrated the possibility of a standardized form of collateral, Vreugdenhil claims that ING’s solution will not support Bitcoin and other volatile cryptocurrencies.
“We are looking into peer-to-peer lending in a DeFi kind of setup. But then not on Bitcoins. What is interesting to us is how you can probably create peer-to-peer lending or open up lending capabilities with different kinds of collateral. So with different ways of doing this rather than with volatile Bitcoin.”
However, an official spokesperson for ING claimed that the plans have yet to come to a concrete conclusion and that there has been no proposition developed for the regulator as of yet.
ING’s DeFi Whitepaper
The multinational bank had released a whitepaper detailing its DeFi viewpoints earlier this year, where the company praises DeFi for its borderless payments, 24/7 operations, and speed of transactions. In the whitepaper, ING also specifically mentioned the workings of the lending protocol Aave, where users can leverage smart contracts to deposit crypto as collateral and withdraw loan amounts in stablecoin. The whitepaper compares the similarity of the lending mechanism in Aave with that of a traditional asset loan, where borrowers can take out debt to pay for everyday expenses while their investment continues to compound. ING’s concerns about using volatile assets as collateral are also addressed by the borrowing and lending of stablecoins in Aave.
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