Creditworthiness checks could soon become a thing in the crypto lending market as TransUnion and Spring Labs plan to introduce credit scores as part of the latter’s Digital Passport for obtaining digital asset loans.
Ky0x Passport With KYC and AML Verification
TransUnion, a major consumer credit reporting company in the U.S., announced a partnership with security company Spring Labs to bring credit score reports into the crypto lending market.
TransUnion will offer this service to customers through Ky0x Digital Passport, a solution developed by Spring Labs that bridges web 3.0 applications with custom off-chain data.
The digital passport gives users know-your-customer (KYC) and anti-money-laundering (AML) identity verification badges while protecting personal data from public access. The ability to link credit scores to digital wallets will be available to users by the end of 2022.
Using the passport, TransUnion customers have a greater chance of receiving improved interest rates. Also, including credit scores on the digital passport would introduce creditworthiness checks, which would pave the way for zero-collateral loans.
Both parties believe this move will lead to better opportunities in the digital asset lending economy, as well as create greater trust between lenders and customers by reducing the risk involved.
Speaking on the announcement, President of U.S. Markets and Consumer Interactive at TransUnion Steve Chaouki explained that the firm recognizes the growth potential of the DeFi space. As such, it sees this as the perfect opportunity to provide users with the tools needed to safely interact with a broader set of financial products.
Chaouki also added that the partnership stimulates competition in the market and drives companies to develop more user-centric applications while remaining compliant with regulatory policies.
The news comes as the latest development involving both entities. In 2021, Spring Labs raised $30 million in funding to foster greater access to the firms’ data-exchange network. The funding round was led by TransUnion.
Uncertainty Of Cryptocurrency Regulations
Regulatory uncertainty remains a problem for crypto lending firms in the United States. A number of platforms looking to offer their services have reportedly been shut down by the Securities and Exchange Commission (SEC).
Coinbase previously halted plans to introduce a crypto lending product to customers in the U.S. following legal pressure from the Commission. BlockFi, a centralized trading and lending digital asset outfit stopped operations after receiving a cease and desist order from the New Jersey Bureau of Securities back in July 2021. A similar order was also served to popular cryptocurrency lender Celcius.
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Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
