3 crypto lending trends for over 40 investors

Crypto lending is a fast-growing sector within DeFi that presents a great financial opportunity for investors over 40. But because DeFi is still so new, the crypto lending industry is still developing and experiencing several different trends that could shape its future.

Check out these top three crypto lending trends that older investors should keep an eye on:

1. Bringing regulation to crypto lending

Several big-name crypto lending companies have been in discussion with regulators from the U.S. Security and Exchange Commission (SEC) for a while now. 

In the past year, the SEC took a closer look at three companies in particular: Celsius Network, Voyager Digital, and Gemini. The SEC was determining whether the lending companies need to register their assets as securities with the SEC. Since then, Celsius and Voyager have filed for Chapter 11 bankruptcy as well as being sued by previous customers and partners. Gemini has gotten into hot water as well, as the SEC has sued them, alleging that they violated investor protection laws.

Broadly speaking, crypto lending companies have been cooperating with the SEC and offering their own regulatory solutions to avoid investigation and satisfy regulators. This could have the positive effect of broadening crypto lending’s appeal to the mainstream.

2. Developing DeFi protocols for undercollateralized loans

Another trend in crypto lending is making crypto-backed loans more accessible to people who don’t have large amounts of capital available as collateral. 

Currently, crypto loans are overcollateralized with platforms asking for as much as double the loan amount.

Recently, several protocols aimed at bringing under collateralized and uncollateralized loans to DeFi in a safe way have been gaining traction. Under collateralized loans have been a goal for the crypto lending industry for a while now because they would make the lending market more inclusive and bring in more capital for investors. 

However, the struggle is to find a way to keep these loans non-custodial while maintaining security for lenders and institutional investors. 

3. More involvement from traditional financial institutions and businesses

The last major trend that appeals to older investors is that crypto lending is receiving increasing interest from traditional financial institutions and institutional investors. 

At the beginning of 2022, the TransUnion credit firm announced a partnership with data exchange security firm Spring Lab to introduce credit scores to crypto lending platforms. Borrowers would be able to share their credit information with lenders to get lower interest rates on their loans. 

Other crypto companies are offering other protections to help institutional investors feel safer about investing and lending with crypto. For example, the digital asset bank BVNK recently launched an insured, custodial crypto yield service that allows businesses to benefit from crypto lending without dealing directly with crypto’s price volatility.

The future of crypto lending

As the DeFi lending industry keeps growing, it will only see more interest from government regulators and traditional financial institutions. But as it changes, it may gain a broader appeal among crypto skeptics and older investors. 

By paying attention to the trends in the DeFi industry, Gen X and boomer investors can gain a better understanding of crypto lending and its future, and learn how to benefit from it.