Dakota Launches as a New Crypto Bank Focusing on DeFi

In an exciting development in the world of cryptocurrency, Dakota has emerged as a new player in the market, introducing itself as a crypto bank designed to rectify the issues faced by centralized lenders like Celsius and BlockFi. Officially unveiled on Wednesday, Dakota was founded by former executives from Airbnb, Anchorage, and Coinbase Custody.

What sets Dakota apart is its approach to treasury management, lending, and payment services. Users can subscribe to the platform for a monthly fee, which allows them to lend their deposited cryptocurrency across a variety of decentralized finance (DeFi) protocols, granting them more control over their assets.

CEO Ryan Bozarth clarified that Dakota’s model differs significantly from traditional crypto lenders like Celsius Network. Instead of acting as intermediaries, Dakota empowers its clients to make their own lending decisions and select the DeFi protocols they prefer to use.

The subscription costs for Dakota range between $150 and $1,500 per month, with clients given the chance to earn returns of up to 9% on their lending activities. Notably, stablecoin users will earn a yield based on U.S. Treasuries.

Bozarth emphasized that the major distinction for Dakota lies in its commitment to lending exclusively through DeFi protocols, which he argues presents transparent risks—unlike the more opaque risks associated with centralized lending.

Reflecting on past failures in the sector, Bozarth noted that during the last market downturn, DeFi protocols like Aave functioned reliably, contrasting starkly with the troubles faced by centralized lenders. He stated, ‘Everyone knew there was nothing to negotiate with; you will be liquidated if you hit this marker.’ In this light, Dakota aims to create a more trustworthy environment for crypto transactions.

Besides its crypto services, Dakota is also catering to traditional currency needs, facilitating dollar transfers, deposits, and withdrawals that align with treasury management requirements. Importantly, all dollars deposited on the platform are backed by U.S. Treasuries.

One of the significant challenges for U.S.-based crypto companies is adhering to varying regulations across different regions. In a bid to navigate this, Dakota plans to utilize a third party with necessary money transmitter licenses (MTL) to streamline its operations within the U.S. Additionally, the company is looking to secure a Virtual Asset Service Provider License (VASP) in Europe, ensuring it can comply with local regulatory demands.