A DeFi protocol wants to become an investment adviser
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Goldfinch co-founder Blake West. Photo illustration: Gabriella Turrisi/Axios. Photo: Courtesy of Goldfinch
The more blockchain gets packaged up in Wall Street trimmings, the more folks may end up using the technology without even knowing it.
Driving the news: Goldfinch, a decentralized finance protocol, is making an effort to register with the Securities and Exchange Commission — as an investment adviser.
What he's saying: "We are going down a more regulated path," Goldfinch co-founder Blake West tells Axios, adding that the company started working with regulators just last month.
- "We can be like a robo advisor for the private credit realm."
Be smart: Robo advisors are online platforms that offer investors portfolio construction at a fraction of the cost of human advisers.
- Asset management giants like Vanguard have them, as do fintechs like Acorns and Sofi. Think of them as another channel for sales.
💭 Our thought bubble: Maybe this is how decentralized finance (DeFi) survives the crackdown, by carving out a space between fintech and crypto to deliver digital assets to the masses in regulated investment wrappers.
- Established asset managers like BlackRock, Fidelity and others are already stepping into the breach from the other side.
Context: Goldfinch, which runs on the Ethereum blockchain, has been trying to sever crypto's reliance on crypto, bootstrapping small, non-crypto businesses in emerging markets into the global economy via undercollateralized crypto loans.
- It revamped its site to smooth the user experience, using authentication techniques that are more consumer-friendly, like Face-ID.
- "We want to be going to a more mainstream investor, someone who doesn't have to be a crypto native or a degen," West says.
Yes, but: Goldfinch still needs to get the nod from the SEC before it becomes a robo advisor, and the agency lately has been on something of an everything crackdown that includes investment advisers.
The bottom line: DeFi doesn't necessarily have to uphold crypto-punkian ideals.
- "There is a bucket of permissionless finance, privacy, no regulation whatsoever, which is a thing that's long been in existence in crypto, which I'm empathetic to and support to a degree," West said.
- "There's this other bucket within DeFi where crypto is trying to create a global interoperable system. It's a language that all the different siloed financial systems can speak. That version is compatible with regulation."
Go deeper: Decentralized finance pioneers announce a mutual fund
