The Impact Of The Imminent SEC Suit Against Ripple On DeFi (Day 258)

Image credit: Sarah Grillo/Axios

Ripple, one of the most important companies in the cryptocurrency industry, said Monday evening that the Securities and Exchange Commission is poised to file a bombshell lawsuit against the company over the alleged sale of unlicensed securities.

Read full Fortune article here.

Another "parting shot at the crypto industry"? Expect more regulators taking shots at the crypto industry in 2021! On the contrary of what the popular view is, the scrutiny is NOT going to stifle the blossoming decentralized finance (DeFi), it will mark the beginning of the mainstream coverage and eventual acceptance of the DeFi, in my view.

Very similar to the trajectory of Bitcoin--all the bad publicity and scam-claims from the most notable investment gurus during the first Bitcoin bull run, only to see the institutional investors quietly accumulating Bitcoins, which ultimately propelled the Bitcoin price to a new record high.

Blockchain is a technology afterall. Bitcoin is just a proof-of-concept of how it could handle financial transactions more efficiently without any middleman. While it supports some use cases with no intervention of regulators--especially under the authoritarian regimes where money policy is a scam itself; being regulated is not the end--in fact, incorporating the blockchain technology will improve the current (regulated) financial systems.

Imagine if we can build an on-chain p2p lending platform where only KYC'd users can participate, making sure all the funds come from a "clean source", and all transactions are not supporting illegal activities. Why would that be a bad thing?

Again, I'm taking a "contrarian view." From the early days, I stand-by my conviction that custodial wallet is not a bad solution to attract more people to adopt crypto vs the purists who believes in non-custodial solutions ONLY. Look at the numbers and see how most liquidity still belongs to the centralized exchanges (CEX) vs decentralized exchanges (DEX). By accepting regulated wallets--i.e. KYC'd wallets, we may see DeFi usage grow from the current DEX user numbers to the way larger CEX user numbers.

To learn more about how you can create KYC'd wallets using the APIS project using the Molecule Protocol, please feel free to PM me on Twitter