How China’s crypto crackdown could boost DeFi

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Hello and welcome to Protocol | Fintech! This Tuesday: China is trying to control crypto, Revolut wants its own token and a digital wallet size contest.

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The big story

China is run by a central committee, so it shouldn’t come as a surprise that bitcoin and other decentralized digital currencies don’t have many fans within the Politburo. The question is whether China’s crypto crackdown is likely to go so far that it ends up popularizing crypto technologies that even the great firewall cannot contain.

China on Friday banned virtually all activity involving digital currencies, marking a crescendo in its fight against crypto. First there was the cessation of crypto mining and then the ban on financial companies from engaging in crypto transactions.

The crypto measures come as China prepares to get a grip on big tech in general. And to the extent that crypto companies have a presence in the country, the crackdown is having an impact.

Huobi and Binance exchanges as well as wallet provider TokenPocket are closing access to their services to new or existing users, according to Reuters. – peer-to-peer commerce.

A smarter strategy for the government might be to co-opt crypto. Benefiting from blockchain innovations does not necessarily require engaging with the open Internet.

Take NFT: As Zeyi Yang Reported For Protocol | China, NFT transactions are done via private blockchains managed by companies and ultimately supervised by the government, or on public blockchains but filtered by the control of a company. The Chinese digital yuan is inspired by bitcoin, but it doesn’t actually use a blockchain instead, transactions will be held in private databases more likely to be controlled by the central government.

But the risk for China is that innovation and capital will go elsewhere. This will mean a brain drain just as crypto related industries like asset management take off elsewhere.

Crypto asset management firm Cobo has just moved its headquarters from Beijing to Singapore. Previous crackdowns in China resulted in capital outflows from stock exchanges originating in China, including Binance, Huobi and OKEx, of $ 28.3 billion in the first half of 2021, an increase of 62%, by Reuters. possible that the Chinese crypto market will be cut off from global innovation, as companies shun the market altogether, ”said Matthew Gould, founder and CEO of Unstoppable Domains.

If China loses, who benefits? Companies that avoided China might look smart as they pick up more and more business. And finally, technologies that bypass central government control could become more powerful.

Trading is a volume game. Binance, Huobi, and OKEx still dominate the crypto industry, but a loss of Chinese customers could impact their business. run software for financial transactions that runs on blockchains and does not depend on a central intermediary. The crackdown only increases the attractiveness of protocols and applications that cannot be abruptly shut down, said Ed DeLeon, founder and CEO of crypto firm Anatha, “More than anything, it increases utility and value. traffic from the entire DeFi ecosystem.

This is why the Chinese repression could backfire on Beijing. When the music industry shut down Napster, file sharing didn’t go away – it split into hundreds of programs and networks. China risks pushing its crypto enthusiasts deeper into the DeFi camp and unleashing their creativity on an increasingly decentralized financial infrastructure. In a speech proclaiming the People’s Republic of China in 1949, Mao Zedong described the state system as a “weapon that we must firmly grasp”. But what if there is nothing to squeeze?

Tomio geron

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From the Protocol | FinTech

Coinbase wants its customers’ paychecks: the cryptocurrency market accepts direct deposit and converts the money directly into cryptocurrency. It also helps some employers pay workers in crypto.

Heard “China’s ban only delays the inevitable. The DeFi movement and cryptocurrencies demonstrate how and why people will do business outside of central banks. Ray Wang, Founder of Constellation Research, on China’s crackdown on cryptography. “What keeps me awake at night is our eviction crisis in America. When tenants fall behind on rent, we can match them with zero interest principal to keep landlord cash flow satisfied, but at the same time keep the tenants in their homes. Samir Goel, co-founder of Esusu, speaking at a Goals House forum @UNGA. “A lot of people don’t realize that crypto is really third generation of the Internet, by re-decentralizing it. It’s Web3. Coinbase CEO Brian Armstrong on Twitter. 3 questions for Brian Barnes, CEO of M1 Finance

What is the fintech trend that you are most passionate about?

I like to see financial disintermediation lead to lower fees and costs. Generally speaking, I think incumbent financial services companies make too much money based on the value they give to clients. They have been excluded from innovation due to high regulatory hurdles and therefore can collect big margins just by fitting in between trades. Finance in its purest form is the allocation of resources. Financial services make up about 20% of the global economy, which means we spend $ 1 figuring out how to allocate the remaining $ 4, and I think that’s too expensive. FinTech companies should increase the efficiency of financial services to reduce costs and therefore free up money to be used more productively.

Which fintech trend is the most troubling to you?

Too many fintech platforms for the everyday consumer are too short-term focused. Your personal finances span your entire life, and your financial health is the result of beneficial habits practiced over long periods of time. Just like physical health, you don’t get in shape by going to the gym just once. You are in good shape by going steadily over the years and decades. Many fintech apps don’t take this perspective and focus only on short-term financial entertainment: “Trade stocks, crypto, options now! The price has changed, change your strategy! You want something ? Buy it now and you can find it later. ”This is not about instilling financial habits that are proven to improve people’s financial well-being.

What’s your favorite hobby without a screen?

I like two-wheeled vehicles, human-powered road bikes, and motor motorcycles. Out of both there is a special feeling of being connected to the road and going fast. Cycling is a great workout, and motorcycles, well, they’re just plain fun.

Need to know Big Ethereum developer could go to jail for speaking in North Korea. Virgil Griffith has pleaded guilty to conspiracy to violate a U.S. sanctions law after making a crypto presentation in North Korea. Revolut plans to deploy its own token. The mobile banking company is reportedly considering introducing its own crypto token for its customers. $ 31 billion data point

That’s the total amount of money customers held in PayPal’s mobile wallet in June, which nearly tripled from five years ago, according to Payments Dive. Square’s total climbed to $ 2.85 billion from $ 44 million.

Thanks for reading through Friday!

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