{"id":11312,"date":"2025-09-20T19:38:07","date_gmt":"2025-09-20T19:38:07","guid":{"rendered":"https:\/\/bitunikey.com\/news\/is-us-crypto-regulation-favoring-cefi-over-defi\/"},"modified":"2025-09-20T19:38:13","modified_gmt":"2025-09-20T19:38:13","slug":"is-us-crypto-regulation-favoring-cefi-over-defi","status":"publish","type":"post","link":"https:\/\/bitunikey.com\/news\/is-us-crypto-regulation-favoring-cefi-over-defi\/","title":{"rendered":"Is US crypto regulation favoring CeFi over DeFi?"},"content":{"rendered":"<p><\/p>\n<div class=\"post-detail__content blocks\">\n<p class=\"is-style-lead\">Once heralded as a disruptive alternative to traditional finance, the DeFi (decentralized finance) sector now faces competition from CeFi (centralized finance)\u2014a hybrid model that blends crypto\u2019s financial rewards with the familiar convenience of centralized platforms.<\/p>\n<div id=\"cn-block-summary-block_48948350761c6e72288527b575d9fc20\" class=\"cn-block-summary\">\n<div class=\"cn-block-summary__nav tabs\">\n        <span class=\"tabs__item is-selected\">Summary<\/span>\n    <\/div>\n<div class=\"cn-block-summary__content\">\n<ul class=\"wp-block-list\">\n<li>While the current administration is not suppressing decentralized platforms, it doesn\u2019t focus on this space either.<\/li>\n<li>The CLARITY Act is set to clarify the legal status of cryptocurrencies. The crypto community members shared the principles of decentralization that should be included in the bill.<\/li>\n<li>There is a risk that centralized companies will disguise themselves as decentralized to benefit from the \u201cinnovator exempt.\u201d<\/li>\n<\/ul><\/div>\n<\/div>\n<p><!-- .cn-block-summary --><\/p>\n<p>    <!-- .cn-block-related-link --><\/p>\n<p class=\"is-style-default\">While much is said about the support of the Trump Administration for the crypto sector in general, tech attorney Alexander Urbelis and other experts believe that the U.S. regulators favor CeFi over DeFi.<\/p>\n<p>But Urbelis warns that the U.S. regulators\u2019 leaning toward facilitating centralized crypto businesses creates dangers. His concerns were <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/unchainedcrypto.com\/america-is-becoming-the-crypto-capital-of-cefi-heres-why-that-must-change\/\" target=\"_blank\" rel=\"nofollow\">outlined<\/a> in the Unchained media article on Sept. 17.<\/p>\n<p>Generally, U.S. regulators are more focused on platforms and products that comply with anti-money laundering (AML) laws and collect user data. <\/p>\n<h2 class=\"wp-block-heading\">What\u2019s the difference between DeFi and CeFi?<\/h2>\n<p>While DeFi and CeFi platforms offer similar services\u2014like cryptocurrency exchange and yield farming\u2014the key difference lies in control. <\/p>\n<p>Blockchain Association co-founder Connor Spelliscy <a rel=\"nofollow\" target=\"_blank\" rel=\"nofollow\" href=\"https:\/\/x.com\/c_spelliscy\/status\/1917202715110756416\">outlines<\/a> seven principles of decentralization, developed with input from over 40 industry experts:<\/p>\n<ul class=\"wp-block-list\">\n<li>Open: The source code should be available to the public.<\/li>\n<li>Autonomous: The network should be controlled by the encoded rules without human intervention.<\/li>\n<li>Permissionless: No one can restrict the use of the network for others unilaterally.<\/li>\n<li>Non-Custodial: The platform doesn\u2019t store private keys of its users. Only users themselves are in charge of keeping their keys and private data.<\/li>\n<li>Distributed: No person or group of people can perform changes to the network unilaterally, nor can they control large portions of the token supply.<\/li>\n<li>Credibly Neutral: The code doesn\u2019t provide anyone with the network privileges over other users.<\/li>\n<li>Economically Independent: The network mechanisms facilitate the token value growth.<\/li>\n<\/ul>\n<p>These principles stand in stark contrast to the approach of U.S. policymakers, particularly in the <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.congress.gov\/119\/bills\/hr3633\/BILLS-119hr3633eh.pdf\" target=\"_blank\" rel=\"nofollow\">CLARITY Act<\/a>, which may allow companies to self-certify as decentralized. <\/p>\n<p>This could lead to discrepancies in how decentralization is defined, allowing centralized platforms to exploit the benefits meant for true DeFi projects. <\/p>\n<p>Spelliscy warns that without clear definitions, opportunistic companies may pass themselves off as DeFi while enjoying the regulatory advantages intended for innovators.<\/p>\n<h2 class=\"wp-block-heading\">Does the U.S. crypto regulation favor CeFi over DeFi?<\/h2>\n<p>The CLARITY Act aims to define the legal status of cryptocurrencies, but it\u2019s still unclear whether decentralized projects will thrive under the current administration. <\/p>\n<p>While regulators have paused legal actions against major CeFi players like Circle, Binance, and Coinbase, they\u2019ve taken a harsher stance on DeFi developers such as those behind Samourai Wallet and Tornado Cash, who face prison for creating privacy tools.<\/p>\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\">\n<div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">The <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/twitter.com\/search?q=%24USDH&amp;src=ctag&amp;ref_src=twsrc%5Etfw\" target=\"_blank\" rel=\"nofollow\">$USDH<\/a> debate is one of the more interesting events in recent crypto memory \u2014 a case where US policy (the GENIUS Act) is crucial to a major design decision.<\/p>\n<p>I have no vote, but I do see some misunderstanding about GENIUS worth clarifying. A few points to consider for those\u2026<\/p>\n<p>\u2014 Jake Chervinsky (@jchervinsky) <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/twitter.com\/jchervinsky\/status\/1965909251198734845?ref_src=twsrc%5Etfw\" target=\"_blank\" rel=\"nofollow\">September 10, 2025<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n<p>The passage of the GENIUS Act in 2025, which sets the framework for stablecoin issuers, is seen as a step forward. However, critics argue it only lays the groundwork for further regulation. While stablecoins serve as a key entry point to DeFi, the U.S. government\u2019s oversight\u2014requiring issuers to obtain permission and collect user data\u2014undermines decentralization.<\/p>\n<p>In sum, the Trump administration doesn\u2019t actively target decentralized platforms, but it clearly seems to favor CeFi over DeFi.<\/p>\n<p>    <!-- .cn-block-related-link --><\/p>\n<\/p>\n<\/p><\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Once heralded as a disruptive alternative to traditional finance, the DeFi (decentralized finance) sector now faces competition from CeFi (centralized finance)\u2014a hybrid model that blends crypto\u2019s financial rewards with the&hellip;<\/p>\n","protected":false},"author":1,"featured_media":9932,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-11312","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/11312","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/comments?post=11312"}],"version-history":[{"count":1,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/11312\/revisions"}],"predecessor-version":[{"id":11313,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/11312\/revisions\/11313"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media\/9932"}],"wp:attachment":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media?parent=11312"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/categories?post=11312"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/tags?post=11312"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}