DeFi eliminates human intermediaries like brokers, bank clerks and traders, and instead uses algorithms to execute financial transactions, such as lending and borrowing. Lawmakers and regulators are worried that consumers are not always fully aware of the potential dangers of the new banklike crypto services and decentralized finance platforms. People who borrow against their crypto could face liquidation of their holdings, sometimes in entirely automated markets that are unregulated. From Pawnbroker to BankBlockFi’s extraordinary growth — and the recent crackdown by state regulators — illustrates the fraught path of cryptocurrency financial services companies amid confusion about what they do. The company also offers interest of up to 8 percent per year on crypto deposits, compared with a national average of 0.06 percent for savings deposits at banks in August.

Source: International New York Times September 05, 2021 06:56 UTC