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

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.”