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November 1, 2022

Equifax; Hong Kong; Google

Welcome to Swarm Markets’ media memo. This weekly update provides comments from Swarm Markets’ co-founders, Philipp Pieper and Timo Lehes, on key industry news that has caught our eye, plus our own developments. 

Comments available on the following news items:

  • Equifax steps into DeFi KYC
  • Hong Kong gets with the crypto program
  • Google Cloud to offer Ethereum node hosting

Equifax partners up to offer DeFi KYC

Major global credit referencing agency Equifax has announced a partnership with Oasis Labs to develop a KYC product for Web3 firms. The firm is making a timely step into an unglamorous but essential area of finance. 

Ultimately we’re going to see DeFi and TradFi integrate. This is already happening in regulatory terms. The broad movement is toward bringing DeFi within existing frameworks as much as possible. 

With the regulatory weather changing quickly and Governments stepping up to provide much greater detail on frameworks for DeFi, and crypto more widely, it makes sense to be an early mover to provide KYC facilities to DeFi projects that are going to find themselves needing it, soon.

The EU has passed key legislation already while the legislative process is well underway in the UK and US. For DeFi businesses now the race is on to implement KYC and other processes such as AML, before the curtain comes down on non-compliant projects. Those that get themselves in order early could benefit greatly as early movers. 

Hong Kong changes its tune on crypto

Hong Kong it would seem, has seen the winds of change from crypto and has shifted its stance accordingly. Even until recently the noises coming from regulators and government in the special administrative region were fairly hawkish on the sector.

But the publication of a statement which projects a much more conciliatory tone seems to indicate that those authorities have seen the value of the sector and its growth potential. Hong Kong is already lagging peers such as Singapore, and other Western regions in terms of opening up to responsible regulatory-first crypto.

It makes sense then that it would look to pivot on previous policy and look to take a share of the pie, as the market grows around the world. Financial centres still hold massive sway in sectoral terms. We can see London and Singapore beginning to make their own cases for the sector to register locally, and Hong Kong seems to have realised it doesn’t want to get left behind. 

Of particular interest in the statement too was the clear indication that the authorities there are interested in the tokenization of assets and smart contracts. This area has enormous growth potential as evermore real world assets are brought on chain, and a revolution in property rights and ownership gets under way. 

Google Cloud node hosting could unburden a key DeFi pinch point

Google Cloud has announced an Ethereum node hosting offering for Web3 developers. It is a savvy and predictable move for a tech giant that has made its mark as a key player in Web 2.0 infrastructure.

Google’s step into node hosting ticks two important boxes for the firm – having a stake in Web3, while remaining agnostic on the projects that develop out of its product set. It is setting out its offering on the Ethereum blockchain first and says other chains will be added in time. 

The calculation here is to do with scale, but also with the relative maturity of staking on Ethereum, especially after The Merge. Staking is a gamechanger for scalability and a cornerstone of the shift to the Proof-of-Stake consensus mechanism, which provides the opportunity to earn yield and act as a validator of the platform. 

There’s no doubting the technical intricacies of running a node independently, with dependence on a variety of other providers forced upon any project that wishes to do so (or has limited other choice). The trade off here is that you’re exchanging reliance on a cottage industry of providers for a big beast in Google.