Once announced as a disruptive alternative to traditional finances, the Defi sector (decentralized finances) is now confronted with competition from CEFI (centralized finances) – a hybrid model that combines the financial rewards of Crypto with the trusted ease of centralized platforms.
Summary
- Although the current administration does not suppress decentralized platforms, it does not focus on this space either.
- The Clarity Act has been set to clarify the legal status of cryptocurrencies. The members of the crypto community shared the principles of decentralization that must be included in the bill.
- There is a risk that centralized companies will disguise themselves as decentralized to take advantage of the ‘innovator exempt’.
Although much is said about the support of the Trump administration for the crypto sector in general, Tech lawyer Alexander Urbelis and other experts believe that US regulators CEFI favored Defi.
But Urbelis warns that the American supervisors are leaning towards facilitating centralized crypto companies, creating dangers. Were his worries sketched In the Unchained Media article on September 17.
In general, American supervisors are more focused on platforms and products that meet anti-money washing laws (AML) and collect user data.
What is the difference between Defi and Cefi?
While Defi and CEFI platforms offer comparable services – such as cryptocurrency exchange and agriculture – the main difference in control is.
Blockchain Association Co-founder Connor Spelliscy contour Seven principles of decentralization, developed with input from more than 40 experts from the industry:
- Open: the source code must be available to the public.
- Autonomous: the network must be controlled by the coded rules without human intervention.
- Permissionless: nobody can unilaterally limit the use of the network for others.
- Non-custodial: The platform does not store private keys from its users. Only users themselves are responsible for storing their keys and private data.
- Distributed: no one or group of people can unilaterally make changes to the network, nor can they arrange large parts of the token facility.
- Credibly neutral: the code does not offer anyone the network rights above other users.
- Economically independent: the network mechanisms facilitate token value growth.
These principles are in stark contrast to the approach of American policy makers, in particular in the Clarity ActWhich means that companies themselves can be certified as decentralized.
This can lead to discrepancies in how decentralization is defined, so that centralized platforms can use the benefits that are intended for real Defi projects.
Spelliscy warns that without clear definitions, opportunistic companies can pass on as Defi, while enjoying the benefits of the regulatory for innovators.
Does the American Crypto Regulation CEFI be confirmed above Defi?
The Clarity Act wants to define the legal status of cryptocurrencies, but it is still unclear whether decentralized projects will thrive under the current administration.
Although supervisors have paused legal actions against large CEFI players such as Circle, Binance and Coinbase, they have adopted a heavier attitude among Defi developers such as those behind Samourai Wallet and Tornado Cash, who are confronted with the prison for creating privacy aids.
The passage of the genius law in 2025, which determines the framework for Stablecoin spending for Stablecoin, is seen as a step forward. However, critics claim that it only lays the foundation for further regulations. While stablecoins serve as an important access point for Defi, the Supervision of the US government – who require issuers to obtain permission and to collect user data – undermine decentralization.
In short, the Trump administration does not actively focus on decentralized platforms, but it seems to be clearly preferable to CEFI over Defi.
