Aave’s DeFi initiative to unlock $255bn market

Aave Arc is compliant with both AML rules and KYC verification

Decentralised finance symbol                                 
Aave Arc is designed to be compliant with Anti-Money Laundering (AML) regulations - Photo: Alamy
                                

Decentralised lending platform Aave has unveiled its Decentralised Finance (DeFi) initiative Aave Arc, which assists institutions to participate in regulation-compliant DeFi.

Aave Arc, the permissioned DeFi liquidity pool for financial institutions, is designed to be compliant with Anti-Money Laundering (AML) regulations and ensures all institutions undergo a Know Your Customer (KYC) verification.  

Fireblocks, the crypto custody firm has become the first of 30 entities to be “whitelisted” for the protocol. Fireblocks explained that the pool “enables whitelisted institutions to securely participate in DeFi as liquidity suppliers and borrowers.”

Accessing a $255bn market

According to Fireblocks, $255.9bn (£189bn) is locked in DeFi and “the market has remained largely untapped by institutions due to a lack of support for enterprise-grade risk management and KYC/AML requirements.”  

Blockdata, a blockchain research firm has said giving institutions access to DeFi could unlock a $1trn (£0.73trn) opportunity over the next half decade.  

As Aave Arc’s first active whitelister, Fireblocks has developed a framework for whitelisting other institutions.  

Thus, Fireblocks has approved 30 licenced financial institutions to participate on the Aave Arc as suppliers, borrowers and liquidators such as Anubi Capital, Bluefire Capital, Canvas Digital, Celsius, CoinShares, GSR, Hidden Road, Ribbit Capital and Wintermute.  

DeFi has been “inaccessible to traditional financial institutions for far too long”

Stani Kulechov, CEO of Aave said: “DeFi represents a powerful wave of financial innovation including transparency, liquidity, and programmability - and it’s been inaccessible to traditional financial institutions for far too long. The launch of Aave Arc allows these institutions to participate in DeFi in a compliant way for the very first time.”

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