The company that developed the Aave DeFi platform has obtained an official license from the UK Financial Conduct Authority (FCA) to operate as an authorized Electronic Money Institution.
Therefore, as of July 7th, 2020, Aave Limited, based in London, is authorized to issue electronic money (e-money) and provide payment services.
The license only covers the issuance of e-money in fiat currency and the provision of payment services in the United Kingdom of Great Britain, and has nothing to do with cryptocurrencies and DeFi, but may allow Aave Limited for example to also handle fiat currency transactions directly, without having to go through other intermediaries.
The FCA license not for DeFi
This doesn’t directly concern the smart contract on which the DeFi protocol created by Aave is based, or its ERC-20 token, but the wider ecosystem the company is creating.
In this way, in addition to continuing to develop the decentralized platform, the company will also be able to provide centralized fiat currency services, which necessarily require an intermediary and appropriate authorizations.
Aave’s founder and CEO, Stani Kulechov, said the application for authorization to the FCA was filed as early as 2018, long before the launch of the DeFi platform in January this year.
“The objective was to help Aave Ecosystem to access payment accounts and on-board users into DeFi. Electronic Money Institution is the same authorization that Coinbase and Revolut has in Europe. It will mostly support on-boarding new users into the Aave Ecosystem and to the decentralized protocol over time. Aave will pilot in the U.K., before rolling out to cover the whole EEA and expanding globally. The service will allow users to go from Fiat to stablecoins and other assets natively in the Aave Ecosystem and then use these assets in the Aave Protocol. The Aave Protocol itself is decentralized and shall be governed by the AaveDAO, however Aave integration entity will seek additional licenses to help to on-board newcomers into the Aave Ecosystem until the ecosystem reaches wide adoption”.
Aave, locked funds tripled in the DeFi protocol
Meanwhile, the volume of funds locked in the Aave DeFi protocol has almost tripled in the last ten days alone, from $529 million on August 14th to the current $1.4 billion.
Moreover, until June 20th, it had never exceeded 250 million, so in just over two months it has multiplied by almost six times.
Thanks to this real boom, Aave has now become the DeFi protocol with the highest volume of locked assets, surpassing even Maker, albeit by only a small margin.