The Battle Between DeFi and CeFi Gains New Ground
Once seen as a revolutionary force, the DeFi sector is now facing stiff competition from CeFi, a blend of crypto’s rewards with the convenience of traditional platforms.
The CLARITY Act seeks to clarify crypto’s legal status. However, there’s a risk that centralized firms may masquerade as decentralized to exploit the “innovator exemption.” While the current management isn’t actively suppressing defi, it doesn’t prioritize it either.
- Decentralization principles outlined by experts highlight openness, autonomy, and permissionless access.
- Thes principles contrast sharply with the U.S. policymakers’ approach,especially with the CLARITY Act.
Alexander Urbelis, a tech attorney, believes U.S. regulators favor CeFi. He warns of potential dangers associated with this preference. Key differences exist between DeFi and CeFi, mainly in control dynamics. DeFi is supposed to be open, autonomous, and non-custodial.
Connor Spelliscy, co-founder of the Blockchain Association, highlights seven decentralization principles derived from industry input. But without clear definitions, centralized platforms might claim DeFi benefits.
While the CLARITY Act defines crypto’s legal status, it remains uncertain whether decentralized projects will flourish. Regulators have been softer on CeFi giants like Circle and Coinbase but have taken harder stances on DeFi developers.
The GENIUS Act, passed in 2025, sets a framework for stablecoin issuers. Critics argue it only opens the door for more regulations, undermining DeFi principles.
