The non-profit agency Digital Asset Advocacy Group (DAAG) recently released a report detailing the rising use and risks of crypto lending.
The report, Crypto Lending and the Need for Consumer Protection, explores the increased adoption of crypto domestically, particularly by millennials.
“There’s no doubt that crypto and its accompanying financial tools are gaining popularity, and that trend will only continue to rise. And as new technologies such as crypto lending are developed and adopted, education and protecting consumers must be top of mind,” DAAG member and financial expert Laura Adams said. “Unfortunately, consumers are already facing significant issues in their dealings with some crypto lenders.”
According to the report, demand for crypto loans from the crypto lender Genesis was seven times higher last year than in 2020, while crypto lender BlockFi experienced what DAAG indicated was an almost 2,000 percent increase in assets under management during the same time frame.
Additionally, the report details concerns regarding interaction with crypto lenders, including circumstances involving cyber attacks; platforms that have already filed for bankruptcy; and lenders sued by their customers for failure of notice.
The report also notes complaints regarding poor customer service in the wake of the collapse of Terra’s LUNA coin and related fallout impacting Nexo customers.
Advocating that protecting consumers should be the top priority, DAAG’s report provides advice on the basic protections consumers should expect from crypto lending companies.