TransUnion, one of the three major credit agencies in the U.S., recently announced it will provide credit scores for decentralized finance (DeFi) lenders in a move to help improve risk management for traditional and crypto markets. The firm is teaming up with data security firm Spring Labs and DeFi identity and compliance software developer Quadrata to offer traditional credit scores without compromising applicants’ privacy.

Last year, the crypto bear market led to a wave of defaults on unsecured crypto loans and highlighted the fragility of such lending, according to a Fundstrat report. Credit scores for crypto borrowers could have helped to mitigate potential losses, said Jason Laky, executive vice president of financial services at TransUnion. By providing traditional (off-chain) credit scores, consumers can use their credit history while also helping lenders gain a better assessment of associated risks.

TransUnion’s service is part of a larger trend by which traditional financial (TradFi) services and crypto markets have become increasingly intertwined. Rival credit agency, Equifax, has joined with Oasis Labs to develop identity management and know-your-customer (KYC), and Equifax is also collaborating with decentralized lending platform Credefi. In October, TransUnion and Spring Labs also introduced a privacy-focused data-sharing service called TrueZero.

Overall, the development from TransUnion is an important step to bridge the gap between the traditional and crypto finance markets. It provides an essential service to allow financial institutions to send information, such as credit data, without revealing sensitive personal data, while enabling lenders and consumers to mitigate risks when trading or lending in the digital asset market.



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