Unbacked Crypto Loans Powered by World ID

Since December, Divine Research has issued approximately 30,000 short-term crypto loans, primarily under $1,000. These loans are made in USDC, a stablecoin, and the company uses World ID to ensure that borrowers cannot create multiple accounts after defaulting on loans. This provides a safer lending process, especially for overseas customers who are often underserved by traditional financial institutions.

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Diego Estevez, founder of Divine, told the Financial Times, “We’re loaning to regular folks like high-school teachers, fruit vendors, essentially anyone with internet access.” Estevez added that the interest rates, ranging from 20% to 30%, are necessary to offset the risk of default, which has been reported to be around 40%.

Opportunities for Everyday Investors in Crypto Lending

The growing platform allows everyday investors to participate in high-risk crypto loans. Estevez pointed out that, “Anyone can provide liquidity. We’ve engineered the system such that after accounting for default rates and interest rates, providers will always make a profit.” This presents a new avenue for regular investors to engage in the crypto economy.

As Divine Research and other crypto lenders like 3Jane capitalize on market momentum, the landscape for unbacked loans continues to evolve. 3Jane, for instance, raises funds based on asset verification but still does not require collateral. The platform plans to use AI agents to automatically follow lending rules and reduce rates.

Crypto Lending Is Gaining Traction

Despite its current small market share, crypto lending continues to gain attention, especially with institutional players reentering the space. Recently, JPMorgan began exploring Bitcoin-backed loans, signaling a growing acceptance of digital asset-backed credit. However, the collapse of major platforms like Celsius and Genesis in 2022 remains a cautionary tale for the industry.

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By scanning irises through a proprietary device called the Orb, Worldcoin aims to verify human uniqueness and distribute its WLD token globally. However, experts warn that such a model, reliant on centralized hardware and control points, could become a digital panopticon rather than a tool for freedom.

Decentralization Is a Philosophy, Not Just Code

As Shady El Damaty of Holonym Foundation explains:

“True decentralization prioritizes user agency, not corporate control. Relying on custom devices and closed infrastructures contradicts that ethos.”

Even with privacy-focused tools like zero-knowledge proofs (ZKPs) and multiparty computation (MPC), El Damaty argues the system’s architecture is fundamentally flawed in its promise of decentralization.

Worldcoin, however, defends its model, stating that the World App is non-custodial and no personal data is stored. The company claims all iris data is encrypted and deleted immediately after processing.

A Pattern of Data Overreach?

Critics see a disturbing pattern. El Damaty compares Worldcoin’s biometric data collection to OpenAI’s large-scale scraping of unconsented user data, calling it a “recurring theme” of invasive tech practices marketed as progress.

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World distances itself from OpenAI, insisting it neither sells nor retains personal data. But concerns remain—especially as governments in Germany, Kenya, Brazil, and most recently Indonesia push back against the project’s local operations.

Targeting the Vulnerable?

According to critics, Worldcoin is focusing its biometric campaigns on developing countries, where individuals may be more easily swayed by monetary incentives without fully understanding the risks.

El Damaty warns:

“In many regions, people are being coerced into giving up sensitive data for short-term rewards.”

Biometric Divide or Digital Future?

If access to basic services becomes tied to biometric verification, it could create a two-tiered digital society, say critics—those who comply and those who are locked out.

Worldcoin says biometric enrollment is optional, and unverified World IDs can still access limited services. However, as digital services increasingly require stronger identity checks, the pressure to “opt in” may intensify.

As AI and bots proliferate online, systems that prove human identity will be essential. But how that identity is verified—with privacy, or through surveillance—may define the digital future.

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As the project gains momentum with major financial backing, concerns around privacy and regulation are just as swiftly rising.

Massive Investment: $135M To Scale Operations

Worldcoin has secured a massive $135 million funding round from top venture firms Andreessen Horowitz and Bain Capital Crypto. The funding will boost the deployment of iris-scanning devices and expand the digital ID infrastructure, especially across the United States, where the company plans to operate in six cities.

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According to the official announcement, more than 12.5 million individuals across 160 jurisdictions have already received a World ID, based on iris biometric data.

Rising Regulatory Pressures: Bans From Brazil and Indonesia

However, not all countries welcome the project. Brazil’s National Data Protection Authority (ANPD) banned Worldcoin’s services in January over ethical concerns tied to offering crypto rewards in exchange for biometric data. This ban was reaffirmed in March, with the company facing fines of 50,000 Brazilian reais (8,851$) per day if it continues operations.

In Indonesia, the Ministry of Communications and Digital (Komdigi) suspended Worldcoin’s license on May 4, citing violations tied to operating without registering as a licensed digital asset provider. An investigation has been launched into the company’s activities.

EU Watchdog Steps In: Data Must Be Deletable

Before these bans, the Bavarian State Office for Data Protection in Germany warned the company to comply with EU data protection laws, specifically requiring that users must have a clear option to delete their biometric data at any time.

Despite these hurdles, Altman’s vision continues to attract deep-pocketed investors, signaling that the digital identity space is set to be one of the next battlegrounds for tech, ethics, and global regulation.

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The post Record Investment in Worldcoin as Global Pressure Mounts appeared first on Coin Engineer.

“Paying people directly for biometric data in challenging economic circumstances is tantamount to coercion. It’s not consent.”

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Governments Oppose Biometric Data Collection

Several governments have raised concerns about the security and ethical risks of collecting biometric data, leading to bans or restrictions on such systems. Globally, digital identity systems collecting biometric data are facing increasing scrutiny.

World ID Banned in Multiple Countries

1. Kenya banned World ID in August 2023.
2. In March 2024, Spain decided to stop World ID, which was collected by minors.
3. In March 2024, Portugal decided to postpone iris screening for 3 months.
4. Hong Kong banned World ID in May 2024, citing non-essential facial scans.
5. In January 2025, Brazil banned the collection of biometric data in exchange for cryptocurrency.

The Brazilian National Data Protection Authority (ANPD) stated that financial incentives for data collection violated informed consent for sensitive information.

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Worldcoin said on June 26 that its partnership with Alchemy will provide World Chain developers instant access to its whole and thorough Web3 developer environment.

This covers core and data APIs, as well as indexing solutions and a suite of other tools required by developers to run their apps.

Furthermore, included among the tools is an infrastructure for account abstraction meant to increase the security and safety of self-custodial wallets within the World Chain system.

Alchemy’s Tools for World Chain Developers

Alchemy will also be including World ID into its toolkit, therefore providing millions of developers all around the world the world access to digital ID technologies.

Alchemy’s engineering lead, Noam Hurwitz, told Cointelegraph he thinks the alliance will let developers construct “human-forward applications” and help bring a billion people on-chain, therefore facilitating “meaningful progress.”

Originally unveiled in April 2024 as a human-designed blockchain, World Chain Tools for Humanity claims that one of the main players in the World Chain ecosystem is Optimism, Coinbase, and the larger Ethereum ecosystem working together as part of the Superchain.

It is still under migration from the OP mainnet and will be the new residence for the World App as well as the World ID that users obtain following an iris scan at one of the several orbs around.

Human-Centric Blockchain: World Chain’s Vision

Verified World IDs allow World Chain’s human-centric optimization to allocate holders priority blockspace and a free gas limit for casual transactions, therefore pushing out the bots and providing developers better access to real users.

Head of Protocol at Tools for Humanity Steven Smith informed Cointelegraph that World Chain intends to be the first blockchain made for humans and the biggest on-ramp for humans to get onchain.

“With that comes the need for infrastructure able to run on quite a vast scale.”

He added that the decision to collaborate with Alchemy was underlined by its demonstrated experience “ensuring guaranteed uptime and reliability” for large companies.

In a future Decentralize with Cointelegraph episode, host Savannah Fortis sits down with Steven to better grasp Worldcoin and its goals for the worldwide future of decentralized digital identification.

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Worldcoin Market Performance

Worldcoin (WLD) has experienced significant fluctuations recently. The token reached an all-time high (ATH) of $11.82 on March 10th before dipping to a weekly low of $7.24. Currently, the price sits at $8.25, reflecting a 3.22% daily increase.

Despite market volatility, the Worldcoin team has implemented changes to the platform in an effort to improve stability.

Worldcoin Price Analysis

While navigating price drops, Worldcoin maintains a relatively strong position. It holds the 81st rank on CoinmarketCap with a market capitalization exceeding $1.28 billion after a 3% surge. Additionally, the trading volume has jumped 35%, reaching $386 million.

Kenya’s persistent ban on Worldcoin, imposed in August 2023 due to privacy concerns, has contributed to recent price declines.

Introducing Worldcoin Personal Custody

Worldcoin operates on the unique principle that only humans can participate. Interestingly, the project’s creator, Sam Altman (CEO of OpenAI, known for ChatGPT and Sora), envisioned a privacy-preserving global identity network called World ID.

Previously, user verification required submitting biometric data. However, a new Personal Custody option allows users to retain biometric data on their mobile devices rather than the network. This is achieved through iris code generation during World ID creation by Orb. Orb verifies biometric information and transmits only a code to the network, safeguarding user privacy.

Orb is solely responsible for data curation, encryption, and authentication. It signs and transmits data packets to user phones, while public key creation also occurs on the mobile device. Orb utilizes these keys to establish the verification process.

Users can choose to delete biometric data upon ID creation or store it securely on their devices. Ultimately, only encrypted data resides on the user’s device, and a public key encrypts the information.

Potential Impact and Conclusion

The introduction of Personal Custody might influence the Kenyan government to reconsider its stance. While the battle between Kenya and Worldcoin continues, the price appears to be recovering after Friday’s 5% drop. The Personal Custody program empowers users to manage their data while upholding the core tenets of World ID.

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