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DeFi Will Accelerate Financial Inclusion Around the Globe

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DeFi has the potential to solve inequality and unlock financial freedom for people around the world, says Brendan Playford, the founder of Masa Finance.

The American dream is the belief that anyone, regardless of background or socioeconomic status, can achieve upward mobility and build generational wealth. However, the traditional financial system has left behind huge segments of the population that have little or no means to build credit and fully participate in the global economy.

Today, individuals worldwide must provide extensive proof of existing credit, while also consenting to a background check before even being considered for loans, leases, and credit cards. Unfortunately, those born into financially stable circumstances have a huge advantage when it comes to building and sustaining an adequate credit score. Those attempting to escape financial hardship are often penalized for the very same reasons they are struggling. Over time, the credit bureaucracy has morphed into a vicious cycle that strays far from the American dream. 

The faults of the credit bureaucracy

Unfortunately, the pandemic only widened the financial inequality gap. Today, the top 1% of Americans now own more wealth than the bottom 92%, with the 50 richest owning more wealth than the bottom 165 million. Furthermore, people at the bottom of the wealth pyramid have limited access to financial education and products. The tools they do have access to are mainly high-cost credit and loans. While these loans can be life-saving in an emergency, they tend to create a debt culture that preys on people who lack financial literacy and don’t have savings to fall back on.

As a British native, I struggled first-hand to build credit after immigrating to the United States. This experience inspired me to build a solution to help those typically left behind by the traditional financial system. Today, that solution, Masa Finance, is on a mission to disrupt the inequality paradigm and unlock financial freedom for people around the world by making access to credit and wealth creation available to anyone through decentralized finance.

DeFi and its potential

Decentralized finance (DeFi) is an umbrella term that includes applications such as decentralized exchanges, margin trading, stablecoins, and prediction markets. This emerging philosophy of banking and financial services is rooted in peer-to-peer transactions via blockchain technology. Through the blockchain, DeFi enables “trust-less” banking, cutting out the traditional financial middlemen such as brokers or banks. DeFi has been a revolutionary force for financial inclusion, as it grants the underserved access to digital assets and financial technology without traditional barriers.

Mobile technology and digital payments are driving fintech innovation to better serve people throughout the wealth pyramid. But the current paradigm still struggles to provide fair and equitable access to foundational, wealth-building tools and products such as investments, savings, and responsible lines of credit. DeFi has the potential to solve this inequality paradigm and unlock financial freedom for people around the world. It can do this by making access to credit and wealth creation available to anyone.

Benefits of DeFi for consumers include improved security, lower costs, more services that benefit marginalized groups, and the ability to build wealth through crypto holdings. These benefits are offered through decentralized apps (dApps) created by various organizations.

However, participating in DeFi at this time is not necessarily easy. One of the main drawbacks of DeFi is the barriers to entry for those unfamiliar with the space. There are an enormous amount of decentralized apps (dApps) and investment opportunities to choose from, which may deter some from adoption. DeFi will gain more traction in the mainstream as the space consolidates and dApps evolve to become more user-friendly.

ReFi: Credit Backed by Goods, Skills, and Services

DeFi loans: how do they work?

The DeFi lending concept offers users crypto loans through a trustless, secure process. Lenders may deposit fiat currency on the platform to be approved for lending. In exchange, they receive interest on their assets. For collateralized loan models, a loan borrower deposits crypto assets as collateral in order to receive a fiat loan. The borrower will get their assets back after paying back the loan. If a borrower takes out an uncollateralized loan, they still have to pay back the loan plus interest.

Unlike traditional lending, where loans are mediated by biased humans, DeFi systems automate all these processes. This is a fairer system as assessing the qualifications of each applicant is more accurate and objective on the blockchain.

DeFi increases consumers’ investing and purchasing power and provides them access to markets and capital that traditional finance does not. If people can link their CeFi and DeFi assets, they can unlock access to uncollateralized loans and other financial products that may have previously been out of reach.

By eliminating intermediaries, DeFi will create a more equitable financial system and reduce friction for all users. 

About the author

Brendan Playford is the founder of Masa Finance. Masa is on a mission to bring the next billion people to DeFi, by building a more equitable credit system that unlocks choice and opportunity for 4.95 billion people. The vision is to build a new on-chain credit bureau functioning as a DAO.

Got something to say about DeFi or anything else? Write to us or join the discussion in our Telegram channel. You can also catch us on Tik Tok, Facebook, or Twitter.

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US Treasury Sanctions Hit Russian Arms Dealer’s Crypto Wallets

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The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed full blocking sanctions on 22 individuals and entities across several countries, including Russia and Cyprus, as part of its sanctions evasion network that supports Russia’s military-industrial complex.

The sanctions were imposed under Executive Order 14024 and are part of the U.S.’s strategy to target sanctions evasion globally, close key channels, and limit Russia’s access to revenue for its war in Ukraine.

US Treasury Goes After Russian Arms Dealer’s Cryptos

The U.S. Treasury’s sanctions were imposed by the Russian Elites, Proxies, and Oligarchs (REPO) Task Force, a multilateral effort to identify, freeze, and seize assets of sanctioned Russians worldwide. This task force leverages information from international REPO partners and key data from Treasury’s Financial Crimes Enforcement Network (FinCEN) to share information, track Russian assets, and sever Russian proxies from the international financial system.

The REPO Task Force aims to maximize the impact of multilateral sanctions while preventing opportunities for Russia to evade or circumvent U.S. and partner sanctions.

The primary target of the sanctions is a Russian sanctions evasion network led by Russia and Cyprus-based arms dealer Igor Zimenkov and his son Jonatan Zimenkov. The Zimenkov network has been involved in projects related to Russia’s defense capabilities, including supplying a Russian company with high-tech devices after Russia’s full-scale invasion of Ukraine. They have also supported sanctioned state-owned Russian defense entities, Rosoboroneksport OAO and State Corporation Rostec, which are critical components of Russia’s military-industrial complex.

Igor and Jonatan Zimenkov have worked closely together to enable Russian defense sales to third-party governments and have engaged directly with Rosoboroneksport’s potential clients to facilitate sales of Russian defense material. Igor Zimenkov has also supported the Belarusian military-industrial complex by enabling the sales efforts of State Owned Foreign Trade Unitary Enterprise Belspetsvneshtechnika in Latin America.

Today, Igor Zimenkov was designated for operating in the defense and related materiel sector of the Russian Federation economy, while Jonatan Zimenkov was designated for having materially assisted, sponsored, or provided financial, material, or technological support for Igor Zimenkov, Rosoboroneksport, and other sanctioned entities.

The Zimenkov network used front companies to funnel money and maintain a lawful appearance. Singapore-based Zimenkov network shell company Asia Trading & Construction PTE Limited and its director, Serena Bee Lin Ng, have sold helicopters to clients in Africa on behalf of the Zimenkov network. Additionally, Cyprus-based Zimenkov network shell company Lobster Management Limited and its director, Mikhail Petrov, have facilitated sanctions evasion by providing support to sanctioned entities.

The Treasury’s OFAC continues to work with its international partners to coordinate information sharing and enforcement and to travel the world in pursuit of sanctions evasion. The sanctions imposed today are a clear signal to Russia and its military-industrial complex that the U.S. and its partners are committed to tightening sanctions enforcement and preventing the evasion of international sanctions.

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BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.



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Digital Wallet Growth Will Enable More Closed-Loop Transactions

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Crypto and fintech investment firm Ark Invest has made bold predictions about digital wallets, estimating that more than half the world will soon be using at least one.

In its Jan. 31 ‘Big Ideas 2023’ research report, Ark Invest revealed that digital wallet global population penetration is currently 40%. This equates to around 3.2 billion users, the firm added.

However, the research suggests that the number of online wallet users will increase at an annual rate of 8%. The firm predicted that this will result in a global population penetration of 65% by 2030:

“Having onboarded billions of consumers and millions of merchants, digital wallets could transform the economics associated with traditional payment transactions, saving them nearly $50 billion in costs.”

It also noted that digital wallets were gaining market share in online and offline transactions. Cash is definitely in decline, accelerated by government initiatives to go digital, as recently seen in Nigeria.


Payment method trends - Ark Invest
Payment method trends – Ark Invest

Digital Wallet Growth to Continue

Ark reported that digital wallets were scaling faster than accounts at traditional financial institutions. Furthermore, U.S. digital wallet adoption rebounded in 2022, surpassing previous highs following a COVID-induced dip.

The firm estimates that U.S. digital wallet users will increase by 7% annually during the next eight years. This will be a growth of around 160 million in 2022 to more than 260 million by the end of the decade.

Digital wallet user growth - Ark Invest
Digital wallet user growth – Ark Invest

Furthermore, online wallets are enabling “closed-loop” ecosystems. This is where consumers and merchants can transact directly, cutting out the middleman. 

“Digital wallets are onboarding millions of merchants to platforms that enable direct consumer-merchant transactions that disintermediate traditional financial institutions,” it noted.

In this closed-loop environment, wallet providers capture more value per transaction, enabling savings to be shared with merchants and consumers.

Open and Closed Lopp transactions - Ark Invest
Open and Closed Lopp transactions – Ark Invest

Additionally, Ark noted that closed-loop transactions could boost the margin structure of wallet providers.

It used Block Inc. (formerly Square) as an example, stating that it paid around 60% of customer transaction fees to third parties in 2022. The fees were paid for interchange, assessment, processing, and bank settlement fees. Block’s net take rate could more than double if customers transacted directly with merchants.

Block Inc. fee structure - Ark Invest
Block Inc. fee structure – Ark Invest

Closed Loop Transactions Could Top 50%

Finally, Ark predicted that these closed-loop transactions could account for over 50% of digital payments by 2030.

It used China as an example where wallets and merchants are largely internal or domestic only.

Closed loop cost savings - Ark Invest
Closed loop cost savings – Ark Invest

In conclusion, digital wallet growth is set to continue. Cutting out the intermediary which they facilitate is beneficial to both the consumer and merchant.

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Strike Launches Lightning Remittances in the Philippines

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Bitcoin fintech giant Strike rolled out its Lightning Network money transfer service Send Globally in the Philippines, a $35 billion remittance market.

Send Globally launched in the Southeast Asian country on Jan. 31, 2023, enabling businesses and tourists to receive international money transfers in the Philippine peso. The country receives $35 billion in remittances globally.

How Strike’s Send Globally Service Works

“Remittances are a broken system and Strike delivers an incredibly empowering experience for people to send money around the world in nearly an instant,” Strike CEO Jack Mallers said.

According to a press release, Strike’s remittance service converts a sender’s fiat into Bitcoin and sends the Bitcoin to a Strike partner in the destination country using the Lightning Network, which in the case of the Philippines, is Pouch.ph. Pouch.ph then converts the Bitcoin to the recipient’s fiat currency and credits their bank or mobile money account, with Strike shielding both parties from the tax implications of handling Bitcoin directly.

Bitcoin’s Lightning Network is a layer-two solution on the Bitcoin blockchain that allows micropayments between nodes over a payment channel. Unlike traditional payment networks, Lightning’s low fees enable almost zero-cost remittances.

Recently, Mallers announced a trial to bring Bitcoin Lightning Network payments to retailers through a partnership with Fiserv’s point-of-sale solution Clover Commerce. The trial allows any application with Lightning capability to pay Bitcoin for goods and services at Clover merchants.

Philippine Smartphone and Internet Adoption Auger Well for Strike

Send Globally rolled out to Strike users in Ghana, Nigeria, and Kenya on Dec. 6, 2022, where it has reportedly gained rapid traction.

However, mainstream adoption in the Philippines will depend heavily on network effects, driven by smartphone and internet penetration.

According to Statista, the number of smartphone users will increase from 85 million in 2022 to 87 million by 2023. Additionally, forecasts suggest smartphone users will increase to 91.5 million in 2025, representing roughly 83% of the island nation’s population.

Smartphone Adoption in the Philippines
Smartphone Adoption in the Philippines | Source: Statista

Additionally, Statista predicts that about three-quarters of the population will have internet access by the end of 2023. Growing internet access increases the chance of Strike’s success, since it helped drive adoption of crypto game Axie Infinity.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.

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BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.



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