Despite The Terra Crash, This Major Bank Is Betting Big On DeFi

The venture capital arm of Thailand’s oldest bank, Siam Commercial, said it is investing in DeFi despite recent weakness in the space.

SCB 10X said it deposited an undisclosed amount into  Compound Treasury, according to a report by Bloomberg.

Compound offers 4% returns on deposits through its institution-grade products. It is the eighth-largest DeFi platform with total value locked (TVL) of $3.19 billion.

Compound is also among the few crypto entities with a debt rating. S&P Global Ratings recently rated the platform with B- long-term rating, or junk.

SCB’s investment in Compound comes just a few weeks after a price implosion in Terra- once the second-largest blockchain in DeFi.

SCB 10X bullish on DeFi

Mukaya Panich, Chief Investment Officer of SCB 10X, said in a Twitter thread that the move comes after 11 months of cooperation with Compound.

The venture capital firm will develop risk monitoring tools to help track parameters on Compound in a similar manner to a bank.  Through Compound, it will also explore incorporating DeFi yield generating products into Siam Commercial’s products.

Panich remains bullish on DeFi despite the Terra crash. Speaking to Bloomberg, Panich said the crash is likely to invite tighter regulations over DeFi, making the space more palatable for institutional traders.

Despite growing crypto adoption, most major trading houses are still hesitant towards DeFi. A lack of regulation over the space, coupled with the need to directly hold crypto are likely the two major factors influencing this.

But with the advent of products such as Compound’s treasuries, this trend could change.

DeFi melts down in 2022

But DeFi is also undergoing a major exodus of value in 2022. Terra’s crash wiped out about $80 billion in value from the space, according to data from DeFi Llama.

TVL in the space has more than halved to $93 billion from a high of over $200 billion earlier this year.

In addition to the Terra crash, a broader decline in the crypto market has also spurred moves out of the space. Terra’s crash has also spurred calls for more crypto regulation.

With more than five years of experience covering global financial markets, Ambar intends to leverage this knowledge towards the rapidly expanding world of crypto and DeFi. His interest lies chiefly in finding how geopolitical developments can impact crypto markets, and what that could mean for your bitcoin holdings. When he isn’t trawling through the web for the latest breaking news, you can find him playing videogames or watching Seinfeld reruns.
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