Aave, one of the leading lending platforms in the crypto space is set to launch a permissioned liquidity pool to lure institutional investors by clearing up the murky compliance waters.
The Aave Pool for Institutions
One of the major downfalls of DeFi at the moment is that it doesn’t require KYC/AML and isn’t regulated. The problem with this is that major institutions don’t want to participate in something that could get them into trouble just because suitable laws haven’t been set in place.
Aave’s new permissioned Arc pool aims to resolve this issue by creating a pool specifically designed for institutions, by bringing in regulatory compliance to decentralized finance (DeFi) space they can onboard institutions that wish to try out this new technology legally. According to Stanl Kulechov, Founder and CEO of AAVE:
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.
By setting up globally recognised due diligence procedures like KYC/CDD/EDD, users will need to comply with specific rules in order to participate. However, by doing this it allows institutions to dip their toes in DeFi for the first time.
