CeFi regulation may create an advantage for DeFi, Bitcoin.com CEO says

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Wel­come to Forkast Fore­casts 2023. In this series, lead­ers, inno­va­tors and vision­ar­ies in blockchains share their indus­try pre­dic­tions for the year ahead.

Dennis Jarvis

Den­nis Jarvis is the Tokyo-based chief exec­u­tive offi­cer of Bitcoin.com, a Bit­coin exchange and cryp­tocur­ren­cy wal­let devel­op­er. Pre­vi­ous­ly, Jarvis held glob­al lead­er­ship roles at Apple, Japan­ese e‑commerce giant Rakuten and blockchain start­up Orb.

Predictions for 2023

Regulators may tip the scale in DeFi’s favor

“We’re clos­er now than ever on the DeFi (decen­tral­ized finance) side with cre­at­ing that [user] expe­ri­ence. I’m opti­mistic that in 2023, we’re going to see this expe­ri­ence gap between what cen­tral­ized exchanges were able to offer and what decen­tral­ized exchanges are able to offer nar­row even fur­ther. And this is going to be in com­bi­na­tion with reg­u­la­tors who may be clamp­ing down where they can on cen­tral­ized exchanges and CeFi. Hope­ful­ly, that’s going to cre­ate a tip­ping point in DeFi’s favor. And it’s up to us in the indus­try to make sure that we are nar­row­ing that user expe­ri­ence gap, mak­ing it as easy as pos­si­ble for peo­ple to explore the world of cryp­to and to seize con­trol of their own finan­cial future and pros­per­i­ty and eco­nom­ic free­dom with tools that are as easy to use as cen­tral­ized finance tools were in the past, but for DeFi.”

The FTX contagion will emphasize the need for DeFi

“I don’t think that the future looks par­tic­u­lar­ly bright for cen­tral­ized exchanges going into 2023. The fall­out from the slew of cen­tral­ized cryp­to busi­ness­es going insol­vent recent­ly is going to con­tin­ue prob­a­bly well into next year. There are prob­a­bly risks of fur­ther insol­ven­cies. It’s going to take time for all the opaque deal­ings of cen­tral­ized exchanges and busi­ness­es to unwind around the fail­ures that hap­pened ear­li­er this year and also more recent­ly with FTX. The busi­ness­es that have already declared bank­rupt­cy are going to make their way through that process. It’s going to pro­vide more head­lines in the news about how bad­ly they mis­man­aged their funds. And it’s not going to be great for investors and cus­tomers of these com­pa­nies. But to shine a light on cen­tral­ized exchanges is a nec­es­sary thing for the indus­try. We’re going to see a lot of cen­tral­ized insti­tu­tions say good­bye to their busi­ness­es and the ones that remain will prob­a­bly be stronger and more reg­u­lat­ed in the future. But this is real­ly going to empha­size the neces­si­ty of DeFi and decen­tral­ized exchanges in cryp­to. And I see this as more of a turn to cryp­to fun­da­men­tals like self-own­er­ship and self-sov­er­eign­ty over funds.”

The industry will return to the fundamentals of decentralization

“It’s a wel­come rever­sal of the past few years where mas­sive amounts of mon­ey have poured into cryp­to, but it’s been in cen­tral­ized cus­to­di­al solu­tions and exchanges. The indus­try has moved away recent­ly from the fun­da­men­tals of self-cus­tody, decen­tral­iza­tion, cen­sor­ship, resis­tance and trans­paren­cy. This is going to pre­cip­i­tate a shift back to those fun­da­men­tals. And this is a great oppor­tu­ni­ty for every­body in the indus­try who is focused on DeFi and cryp­to fun­da­men­tals to edu­cate the pub­lic, espe­cial­ly peo­ple who have joined the space recent­ly about how impor­tant it is to be decen­tral­ized, to be resis­tant to cen­sor­ship and to have sov­er­eign­ty of your own funds. And in fact, we’re doing that with our cen­tral­ized exchange edu­ca­tion fund, where we’re incen­tiviz­ing users through our token pro­gram to explore the entire world of DeFi.”

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