What happened?
Divine Research, a crypto lender from San Francisco, has started issuing unsecured loans globally without traditional ID checks, instead using iris scans for verification. Since December, they have provided around 30,000 short-term loans mostly under $1,000, paid out in USDC, a stablecoin. This initiative focuses on reaching individuals who lack access to traditional banking systems, particularly in developing countries.
Who does this affect?
This new lending model primarily affects people in developing economies who find it challenging to secure credit from conventional banks. It targets individuals like teachers and vendors who have access to the internet but little experience with cryptocurrency. Additionally, it impacts individual depositors attracted by the high yields that Divine offers to offset the risks involved in unsecured lending.
Why does this matter?
This move is noteworthy in the crypto market because unsecured lending is re-emerging after a significant collapse in 2022, which saw major lenders fail. Divine’s approach, backed by biometric verification and high-interest incentives for depositors, could set a precedent in a cautious market slowly regaining confidence. As more investors show interest in the potential returns from unsecured loans, this trend might influence the broader acceptance and evolution of crypto-based financial services.