Some crypto investors I know have been discussing a startup company whose unique selling proposition was originally to provide short term loans collateralised by longer term cryptocurrency deposits. Their business plan is considered technically, economically and mathematically well-designed but in my opinion has ignored the "elephant in the living room"... finding a compatible regulatory jurisdiction.
The two most compelling benefits of their planned crypto-to-fiat lending would be:
This seems even more likely now that the WEF and its minions everywhere, especially Europe, seem determined to sink their vampire teeth into crypto and throw away the corpse. My mistrustful mind sees the Davos men quietly blacklisting such businesses from conventional economic participation, just as they appear to be putting down similarly progressive projects in Africa proposing peer-to-peer financing and telecoms.
The company in question was chartered in the crypto friendly jurisdiction of Zug, Switzerland which I believe has different banking rules than the EU which offers the globally unique EMI charter. My understanding is that the crypto-to-fiat lending capability would be offered through something like an EMI, with some additional permission from regulators allowing them to distribute fiat currency from loans secured with crypto.
So my question is two-part:
The two most compelling benefits of their planned crypto-to-fiat lending would be:
- Continuous holding of one's favourite cryptocurrencies, rather than having to sell crypto assets in spot markets, to get needed cash during crypto bear markets.
- The loaned fiat currency, rather than possibly being taxed as capital gains (and generating a "taxable event" in most jurisdictions), would avoid tax altogether (as with all loaned cash in most jurisdictions).
This seems even more likely now that the WEF and its minions everywhere, especially Europe, seem determined to sink their vampire teeth into crypto and throw away the corpse. My mistrustful mind sees the Davos men quietly blacklisting such businesses from conventional economic participation, just as they appear to be putting down similarly progressive projects in Africa proposing peer-to-peer financing and telecoms.
The company in question was chartered in the crypto friendly jurisdiction of Zug, Switzerland which I believe has different banking rules than the EU which offers the globally unique EMI charter. My understanding is that the crypto-to-fiat lending capability would be offered through something like an EMI, with some additional permission from regulators allowing them to distribute fiat currency from loans secured with crypto.
So my question is two-part:
- How likely are my suspicions that this project has hit a hidden regulatory impasse (which remains undisclosed to their investors and unmentioned in any update to their business plan) that would make this idea impossible, rather than difficult, to implement?
- What avenues could be pursued, or have been pursued, to construct a regulated financial entity like this, and how could we find more about the relevant jurisdictions & charters?
- So (3. for the Indian audience): Has there been any tentative progress for similarly organised business in India, or can the oppressive Reserve Bank of India be counted on to shoot this idea down as well?
