A community update about Nimiq OASIS EU and Latin America
24 Nov 2022
Dear Nimiq Community:
As most of you know, Nimiq invested in a German Bank, at the time known as WEG Bank and currently known as TEN31 Bank. TEN31 Bank has led incredible efforts in Germany to onboard and service crypto related entities, even though there had previously been no precedent of German banks engaging in these activities. Saying they were navigating in uncharted waters is an understatement.
The driving force behind Nimiq’s intention in investing in TEN31 Bank was to bridge the gap between traditional financial services and crypto-related transactions and users. The solution we built and deployed, allows users with “SEPA Instant” bank accounts to transact directly with a hashed time-lock contract and execute a non-custodial and almost immediate swap of Euro and cryptocurrencies. This system is known as “OASIS” (Open Asset Swap Interaction Scheme).
As with all new technologies, certain operational challenges surface. A particular challenge that arises for the effective use of OASIS is market liquidity. So, even though OASIS provides a non-custodial transfer of cryptocurrencies and a counter transfer of fiat currency through a “SEPA Instant” enabled bank account, such trade requires a counterparty to either purchase or sell the cryptocurrency being purchased or sold by the user. This is a similar challenge as faced by decentralized exchanges in their beginnings in the year 2017. The liquidity challenges were resolved by decentralized exchanges using liquidity pools that would have funds available immediately for users to interact and trade against.
In the case of OASIS, the liquidity challenge was addressed by having a disregarded entity (not directly linked to any Nimiq company) to serve as a market maker and to provide the necessary liquidity for near instant swaps.
This process and the services provided by the market maker worked very well for more than a year and a half and TEN31 Bank did not have any regulatory challenges in allowing this market maker to operate within the scope of these services.
The monumental collapse of FTX has galvanized regulators around the world to tighten their grip and interpretation of rules. As a result, the Federal Financial Supervisory Authority of Germany has led TEN31 Bank to halt the services facilitated through the market maker that Nimiq has engaged for OASIS to effectively function, until such time as that market maker holds a German and/or European specific “proprietary trading” license.
The market maker that Nimiq has engaged for the provision of this service, does not currently have a European based “proprietary trading” license. As with any kind of financial services licenses, particularly in jurisdictions such as the EU, this process takes time to complete and legal and financial requirements to be met.
Given this situation, TEN31 Bank and Nimiq Team are forced to pause the operation of the OASIS function that allows users in the EU with a “SEPA Instant” enabled bank account to swap EUR and cryptocurrencies. Note that this does NOT affect the possibility of users to purchase cryptocurrencies using credit/debit cards.
With OASIS Pro in its final release step, the successful community testing, and the new referral system ready to go, this unexpected pause comes at a point in time when Team Nimiq was excited to present results to the community and eager to ramp-up marketing for OASIS. The team is actively seeking to engage the services of a European licensed market maker as well as additional options that can allow the OASIS service to operate with SEPA Instant.
On a related note, as a worldwide first for NIM, Costa Rican payment service provider coinpay.cr will shortly enable the purchasing and selling of NIM for fiat currencies US Dollars (USD) and Costa Rica Colones (CRC, local currency of Costa Rica). In addition, in partnership with another Costa Rican financial institution, Nimiq is working on implementing OASIS for the SINPE system (the national instant payment system of Costa Rica and equivalent of SEPA Instant in Europe) to enable both the SuperSimpleSwap service and in-wallet non-custodial swaps between NIM and USD or CRC. Costa Rica will be the first country in Latin America in which this functionality will be available and Nimiq is excited to continue exploring this emerging audience of potentially more than six hundred million users who currently lack meaningful fiat on- and offramps for crypto!
None of the statements must be viewed as an endorsement or recommendation for Nimiq, any cryptocurrency, or investment product. Neither the information, nor any opinion contained herein constitutes a solicitation or offer by the creators or participants to buy or sell any securities or other financial instruments or provide any investment advice or service. All statements contained in statements made in Nimiq’s web pages, blogs, social media, press releases, or in any place accessible by the public, and oral statements that may be made by Nimiq or project associates that are not statements of historical fact, constitute “forward-looking statements”. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual future results, performance, or achievements to be materially different from any future results, performance, or achievements expected, expressed, or implied by such forward-looking statements.