Regulatory considerations are front and center as a panel of cryptocurrency industry insiders unpacks the current state of CeFi and DeFi in Paris.
Centralized Finance (CeFi) will continue to be an important means of driving the adoption of decentralized financial services (DeFi) in the future, but regulatory considerations are still an important part of this process.
This was a key issue during a panel titled “How to do CeFi successfully – the balance between TradFi and DeFi?” at Paris Blockchain Week. A small number of industry experts have discussed the current state of CeFi and DeFi, their relationship, and their importance in the future of the space.
Eric Turner, vice president of marketing intelligence at Messari, highlighted the important differences between these two issues, which have been little covered in recent years given the link between centralized exchange and non-existent platforms. Turner also highlighted the CeFi project as the first step on the ramp for the “next billion” in terms of fiat investment systems and a trusted way for large professional investors to move around the world.
Joaquin Sastre, Managing Director of BitGo LatAm & EMEA, said that the wallet platform is focused on companies that see a big difference between the two models. Sastre argues that the adoption of DeFi systems and platforms will be a natural progression, while CeFi continues to give the authorities a way to provide some companies with protection through management and regulation.
Ian McAfee, co-founder and CEO of Shift Markets, highlights the importance of what CeFi platforms and DeFi protocols have to offer while suggesting that the term itself serves another purpose in defining and capturing what technology has to offer ability to do. Charlie Meraud, CEO of the cryptocurrency market who is Woorton, believes that the two are becoming intrinsically linked, growing from the first DeFi drawdowns that gave better interest rates and pools of liquidity than anywhere else.
CeFi continues to be the main driver for cryptocurrency adoption according to McAfee, who said that central banks are “always waking up to crypto” as an asset class. Helping banks and retailers is to introduce them to the CeFi service as a central exchange.
Sastre also believes that tokenization of assets is another key adoption factor that both CeFi and DeFi players serve. He said that the tokenization of financial assets and real estate is a “no-brainer” to be driven especially by the wider use of CeFi.
As CeFi continues to integrate with the DeFi system to serve both merchants and corporate users, regulation remains one of the most important issues for organizations and companies that are looking to enter the crypto ecosystem – money through exposure. For BitGo’s Sastre, the law is an inevitable part that is important because of the fallout from the failure of CeFi leaders like FTX last year.
Turner emphasized the need for the cryptocurrency industry to actively participate in leading discussions with regulators and government agencies to help the less crypto-savvy to better understand the do cryptocurrency. Regulation is a very hot topic given that the US cryptocurrency exchange Coinbase received a Wells notice from the US SEC regarding its staking activity on March 22. This is a good example of a CeFi player that offers services to its users based on DeFi. Cointelegraph is on the ground at Paris Blockchain Week – providing live updates from keynote presentations, panels and interviews during the event.
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