For U.S. companies holding bitcoin, ethereum or stablecoins, Residual Token, Inc. ($eRSDL) has launched the first U.S. regulatory compliant DeFi pool. U.S. company treasurers, CFOs and controllers face the challenge associated with the limited allowed use of their digital assets. Tasked with managing those assets, most have been holding them in cold storage or with custodians; solely relying on price appreciation to meet return expectations. For years, retail crypto users have been able to experiment with ways to generate yield by supplying their digital assets in DeFi pools all across the decentralized web. Some of those experiments have paid off for retail users, but the overriding issue for institutions; namely, knowing the source of the returns, has remained an open issue. Residual Token (symbol: $eRSDL), in conjunction with its banking partner, NextBank International, Inc. a wholly owned subsidiary of NextPlay Technologies, Inc. (NASDAQ: NXTP), and custodian, Aegis Custody, have built a platform that solves the institutional, source of returns problem.
U.S. companies can safely supply and borrow in a closed DeFi P2P (pool-to-peer) environment with their newly launched, regulatory compliant and advanced technological framework. Bank commercial customers will be participating in a private pool only with the bank’s other U.S. institutional customers.
“The U.S. government wants to know where and how returns are being generated,” says Howard Krieger, CEO of Residual Token, Inc. “Frankly, if I’m the Controller, Treasurer or CFO of a U.S. company holding crypto, I’d have the same concerns.”
Residual Token calls the product ReserveLending+ and its purpose is to provide a safe harbor in the open ocean of DeFI.
What is P2P (pool-to-peer) DeFi?
Unlike traditional loan pools where returns are calculated in a black box, decentralized, pool-to-peer lending pools generate income to suppliers by charging borrowers interest. People and companies participate by adding their liquidity (assets) into a pool that counterparties may borrow on an over-collateralized basis. Most P2P platforms today are either permissionless or consist of a heterogeneous mix of people and companies from around the world.
An example of the latter is ReserveLending, Residual Token’s retail P2P DeFi lending platform. Anybody with an ERC-20 wallet address can participate. While this type of platform services the needs of individuals or entities not concerned with where the borrower’s have generated the capital to pay interest, the risk to U.S. companies that the source of funds to generate the return are ill-gotten is too great.
“ReserveLending pools overview”
What is institutional decentralized finance?
Institutional DeFi is a term crypto enthusiasts may or may not have heard of before. Platforms like AAVE Arc, using Fireblocks custody and wallet controls, provide institutions from around the world Financial Action Task Force (FATF) compliant access to a pool-to-peer platform.
Similar to retail decentralized finance, institutional DeFi allows for the supplying and borrowing of selected cryptocurrencies. Institutional DeFI allows only KYC’ed (Know-Your-Customer) and whitelisted entities into a pool. Specific to ReserveLending+, each entity must submit to accept adherence to strict AML (Anti Money Laundering) guidelines through its NextBank deposit account application in order to be whitelisted. Other institutional platforms have their own terms and conditions and ways to maintain the confidence and security of its corporate members.
As a result, excess company-owned bitcoin, ethereum or other digital asset can earn interest in some cases at greater savings rates than offered by traditional banks. Conversely, loans can be drawn at competitive rates for qualified borrowers.
Specific to $eRSDL holders, Residual Token has committed to using a portion of its revenue to purchase its token from the marketplace depending on borrower volume and prevailing interest rates. The company is encouraging interested U.S. entities with crypto to request a demo to learn more.
Buying a Bank: A DAO With a Purpose
After one year of working hard on building DeFi products, Residual Token plans to support the launch of a decentralized, autonomous organization or DAO that is intended to support the vision of institutional blockchain-based banking products for all. The immediate goal of the DAO will be to buy a bank with the DAOs treasury and bring in neobanking products, including Residual Token’s own suite of products. According to Residual Token, $eRSDL token holders will get early access and discounts on the DAO’s bonding program.
Blockchain technology allows for safe and secure transfer of assets between unrelated parties without the need for intermediaries. Institutional DeFI, or the use of company assets to supply borrowers’ capital, requires certain safeguards be in place in order to meet regulatory guidelines, and in some cases, the company’s own fiduciary obligations. Residual Token, along with its banking and custody partners have designed a unique framework that addresses both the regulatory concerns U.S. companies may have participating in these products, but also the concerns of treasury managers at these companies.
About Residual Token, Inc. dba unFederalReserve
In business since 2018, Residual’s team of former bankers, technologists and compliance professionals have been exploring ways to make crypto lending and borrowing markets safer and traditional markets more efficient. They currently have in development a handful of blockchain-based software available for license. Its flagship product, ReserveLending, allows permissionless access to crypto holders so that they can deposit, earn and borrow top digital assets safely, easily and effectively for cash management, hedging or speculative purposes.
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