In the past year, although decentralized finance (DeFi) has attracted attention with various big data headlines, its much-watched total lock-in value (TVL) has increased by nearly 800%, from US$20 billion in early 2021. To the high of US$157 billion in May, centralized encrypted financial services have also achieved explosive growth.
According to Nexo co-founder and Chartered Financial Analyst Kalin Metodiev, the cryptocurrency savings account company’s asset management scale has quadrupled to reach 15 billion U.S. dollars, and the number of customers has increased to 1.7 million. It will be launched soon on the platform New functions such as built-in asset exchange.
In Miami, Nexo and Cointelegraph only had a brief conversation through the Bitcoin Art Gallery sponsored by Nexo. The Bitcoin Art Gallery is one of the highlights of the Bitcoin 2021 conference hall. However, shortly after the frenzy ended, Cointelegraph conducted a written interview with Metodiev to discuss the rise in key indicators, the risks that DeFi brings to Nexo’s model, and the way forward that the agency has adopted.
The Bitcoin Art Exhibition has begun! I went to Miami and met with the people in Scarce City. The artwork is exhibited and the auction begins
–Alex schaefer (paintwithalex) June 4, 2021
Adapt to DeFi
When talking about the rise of DeFi, Metodiev believes that due to some of its core and permissionless features, there is a clear upper limit on the height that DeFi can reach:
“We are very interested in the opportunities that the DeFi field may provide, and have discovered the advantages of the concept of automation and decentralization. However, this is an area that needs to be aligned with institutional policies and standards in order to survive and develop on a large scale in the long term. Nexo Operate in accordance with official anti-money laundering/know your customer (AML/KYC) guidelines and compliance agreements, which have not yet been adopted by the DeFi field.”
Despite this, the company is still closely tracking emerging verticals and “learns and adopts new best practices from any source at any time, including the DeFi field.”
At present, the company has taken some measures, which may be to make Nexo more attractive to DeFi users. These initiatives include the governance function of the NEXO token (NEXO dropped to $1.91 from a high of $4 earlier this year), and a transparency initiative, although it may not be able to compete with on-chain information, Metodiv said he hopes it will be able to Lead this field.
“Our most recent Nexo transparency initiative started with full disclosure of our regulatory arrangements and insurance coverage. In order to complete Nexo’s institutional framework, we have hired multiple partners and hope to be transparent in details.”
Compliance and adoption
Metodiev believes that since institutional adoption seems to be forever hampered by legal and regulatory issues, Nexo can play a key role in getting big bank funds into cryptocurrencies.
“Some people claim that blockchain-based financial services should break away from the traditional banking system and thrive in their own small bubble in some way. We believe that such a view is funny in the modern financial system of the 21st century. It’s a total illusion.”
He pointed out that the growth of institutional clients is “exponential”, and the amount is sometimes staggering: Nexo has the ability to help institutions accumulate and borrow more than “$1 billion” of crypto assets.
He pointed out that the regulatory environment is still very vague, “If a set of rules for companies such as Nexo are not in place, it will be difficult to achieve compliance”, but he also said that the company will strive to be as compliant as possible. In addition, unlike many DeFi builders think, clear regulation may help the DeFi field more than hurt.
“We believe that in the long run, supervision can contribute to more companies. We hope that more companies in the blockchain industry will follow our pace in compliance, transparency and perfect service.”
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.