It'll be curious to see how these decentralized lending platforms respond. They can put up disclaimers/walls on their websites, but the platforms are on the blockchain and can't be censored.
What are you talking about? Nexo and Celsius are centralized.
There are no blockchain contracts. When you sign up with Celsius, you transfer ownership of all your crypto to them. If they went bust, it is their asset and their bond holders get it.
In return you get a promise of interest, payable at moment you ask to withdraw.
But there’s no blockchain contract.
1. They buy your crypto outright
2. They gamble it in the markets (their secured debt issuance documents lists greyscale, osprey and some stock warrants on a failing biotech company as their assets. And one crypto tech firm, forget the name)
3. You hope they don’t go bellyup and will give back the crypto if you ask for it.
> the platforms are on the blockchain and can't be censored
New York's Attorney General is powerful.
If someone were stupid enough to openly defy her, they'd be facing down against an opponent who can, just off the top of my head, freeze funds, seize domains, jail employees and announce as tainted affiliated wallets.
Her office was empowered to take on the most powerful financial institutions in the country. Apart from the pursuit of an insanity defense, these firms have no reason to keep doing business in New York.
> the firms CAN'T turn off their contracts on the blockchain. Anyone can call the contracts.
I don't think the issue is with the technology per se as much as with someone being paid to market it. Grandma isn't going to roll her own wallet. She might see a 4% yield on what looks like a savings account and not realize the added risk.
Agree that short of nation-state involvement, the contracts are probably there to stay. (Though if a state wanted to get particularly nasty, they could go after anyone maintaining them.)
Your statement does not really make any sense. Unless you are talking about the centralized banking shutting the ramps to coinbase or other large fiat/crypto custodians/exchanges.
That would piss off a lot of people.
With respect to defi, other than trying to shut down entities that host the website which is really just a gui for interaction I'm stumped at what action exists.
For instance, I go on coinbase buy ethereum and some wrapped token. I can then transfer that wrapped token to just about ANY smart chain I want paying for the tx, then use that money get an over collateralized loan, then go buy some other wrapped/native token collect what ever yield I want and use that to service the loan fees.
I can then unwind the entire process when ever I want come back to coinbase sell the wrapped token on their open market and then turn it into fiat. That's not only it. I can unwind my loan/yield strategy convert it into an ERC20 stable token transfer that any fiat on/off ramp I want and voila. I'll use tools to keep track of the transfers/txs pay taxes to the IRS on the cost basis.
What can they actually do about that other than action that WOULD cause mass panic and induce the very thing they are afraid of.
That's the thing though, the stated goal of all this is for it to work without it being run by firms. Most of these projects are explicitly firms, or firms masquerading as not firms, or firms that have a clear goal to dissolve stewardship when these projects can run themselves, and there are a couple that aren't firms. As this process continues, there will be lots of projects running without a company of any kind. Once that happens, what are governments like that of New York going to be able to do?
Regulators tend to not be super proactive and hypothetical, right? I suspect they'll wait until people losing money in truly community driven crypto markets becomes a significant issue, and then chip away wherever they interact with the real world, in New York.
Well all those regulators will manage to accomplish is to stagnate their own financial centers and lose out on changes in the financial services industry.
The city of new York supplanted the City of London as the worldwide financial powerhouse very early last century. This was partly (though not primarily) due to regulatory environments in the City of London to protect entrenched interests, thus putting them behind the curve and allowing this new, innovative city to take momentum in the financial industry. As the financial industry changes rapidly, particularly as it democratizes, we will see less influence from these behemoth financial centers, but anything one of them does to try to hinder these changes to protect itself will only accelerate it's demise within this industry. New York is making one of the mistakes the City of London did in the 20th century and it will pay for it.
