Victor Ugochukwu · Dec 14, 2020 . 5min read
Aave obtains Electronic Money Institution License from UK’s FCA
DeFi industry's super app, Aave obtains Electronic Money Institution (EMI) license from UK's watchdog, Financial Conduct Authority - FCA
By Victor Ugochukwu · Aug 25, 2020 . 7min read
Money market protocol and one of DeFi industry’s super app, Aave obtains Electronic Money Institution (EMI) license from U.K.’s watchdog, Financial Conduct Authority – FCA.
In a recent news publication by The Block, the FCA has issued the EMI license to Aave on July 7th. This gives Aave authorization allowing to offer services such as issuing digital cash alternatives and providing payment services.
The implications for this license is the possibility of Aave using U.K. as a strategic launch base for expanding into the European Economic Area – EEA. Confirming this, Stani Kulechov, founder and CEO of Aave said,
“Aave will pilot in the U.K., before rolling out to cover the whole EEA and expanding globally,” said Kulechov. Specifically, the service will allow users “to go from Fiat to stablecoins and other assets natively in the Aave Ecosystem and then use these assets in the Aave Protocol.”Stani Kulechov, founder and CEO of Aave
Consequently, Aave had to create a separate website and entity to acquire the EMI license to operate in the U.K.
As a result of this, Aave now ranks in the class of another successful tech giants Revolut, Coinbase and Gemini. These lots also bear the same license for their operations in the U.K.
“The objective was to help Aave Ecosystem to access payment accounts and on-board users into DeFi,” he told The Block in an email. “Electronic Money Institution is the same authorization that Coinbase and Revolut has in Europe. It will mostly support on-boarding new users into the Aave Ecosystem and to the decentralized protocol over time.”Stani Kulechov, founder and CEO of Aave
Aave newest EMI license and regulatory approval from the UK body breeds some concerns
Although this news comes with excitement for Aave community and DeFi protocol enthusiasts, some have had to express concerns. Sifting through messages from Aave community on Telegram and Discord, many are asking what the implication of this EMI license regulatory approval from the UK means for tax liabilities and most importantly KYC. Some said the fact that they use Coinbase they have received tax liability mails from the IRS. Also, others are saying the moment the protocol demands them to start submitting KYC will be the end.
Apparently, Aave CEO had shed some light in this area, speaking to The Block, he said
“The Aave Protocol itself is decentralized and shall be governed by the AaveDAO, however Aave integration entity will seek additional licenses to help to on-board newcomers into the Aave Ecosystem until the ecosystem reaches wide adoption.”
Aave continues perform fairly well in the DeFi industry shooting into the top spot with TVL in decentralized protocols.
Clearly Aave has become the most valuable DeFi protocol in terms of TVL. In addition to this EMI move, Aave’s adoption move is yielding fruit.
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