Posted on September 17, 2025 at 12:14 p.m. HNE.
As Bo Hines has left his post As Executive Director of the Council of Councilors of the President of Digital Assets, he has credited himself and David Sacks, the AI of the White House and the Czar Cryptographic, to have positioned “America as a cryptographic world capital”. But his eight -month term, which he left to take a lucrative position in a highly centralized cryptography company, consisted largely in large victories for the centralized crypto. No bigger than the passage of Genius Legislation in July, which deployed the red carpet for Stablecoin companies like Circle.
This legislation was confused with the support of decentralized finances (DEFI), but it is the opposite. Decentralization is being implemented.
With the successor of Hines, Patrick Witt, who was previously his assistant, now in the role, Witt should demonstrate a deep appreciation of the power of decentralization. Otherwise, American risks are trapped in centralized financing structures (CEFI).
The promise and power of crypto cannot be divorced from the principle of decentralization.
This story is an extract from Bits + Bips Newsletter.
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How the United States supports CEFI at the expense of DEFI
The Act on Engineering only allows transmitters of authorized payment stallions to operate in the United States, massively promoting centralized companies like Circle. In general, being an authorized entity means having received federal approval from the currency controller office (a federal banking regulator) or an equivalent state regulator, anti-white (AML) compliance programs and compliance programs of the Secrecy Act (BSA) and subject to regular audits. Although decentralized companies can technically form an American legal entity, become approved and meet all requirements, this would centralize them effectively.
These limitations put companies like Circle, which problems The $ 73.55 billion USDC, has a clear advantage. In fact, it now appears that Global Leader Tether, the company behind USDT dollars, has to catch up in the United States hiring The aforementioned hines as a main advisor and it will be CEO of Tether USA ₮, a new company dedicated to the United States ₮ Stablecoin which will apply to being a genius.
Céfi is too risky to be the cornerstone of the Defi legislation
THE collapse From FTX in 2022 showed the cryptographic industry how CEFI can be a reproductive ground for bad players. Sam Bankman Fried and Alameda secretly and illegally searches for illegal collusion in the abusive use of user funds. In the end, the FTX was forced to file for bankruptcy after having enough liquid assets to cover withdrawals, resulting in billions of dollars in losses. And in a critical way, let us not forget that this led to a cascade of liquidity crises due to the inter-social loans within the CEFI, causing bankrupt deposits to travel, Celsius and Blockfi, among others.
Showing resilience in the face of market turmoil, non-guardian defective protocols such as uniswap and curve treatment without interruption, providing a necessary and safe outing for separation funds quickly with the CEFI platforms troubled by the collapse.
Centralized companies have also been faced with similar problems. In 2018, Tether would have given guarantees that underlie his stablecoin to his sister exchange, Bitfinex, to help cover a hole in his balance sheet without saying investors or customers. The company ultimately paid A fine of $ 18.5 million to settle the accusations of the Prosecutor General of New York. Then, in 2022, the Terrausd Stablecoin / Luna Defi ecosystem, which, at one point, was worth 40 billion dollars, collapsed when a system elaborated with financial engineering and secret offers to support the asset failed to keep the ankle. The founder of the project, Do Kwon, argued Culpable to two American accusations of conspiracy for fraud and fraud in August. Even surround face to face A crisis of release in 2023 when it had $ 3.3 billion in USDC guarantees trapped in Silicon Valley Bank.
Despite this story, CEFI remains a comfortable starting point for regulators, because its commercial structures often reflect traditional financial companies. It is not a cornerstone on which the DEFI legislation must be built.
How to protect decentralization
While Witt acclimatizes to this new role, the protection of decentralization is more important than ever. With the law on engineering now in the rear view mirror, the development is to turn to legislation on the long -awaited market structure which will rule key questions such as the American Commission for Securities and Exchange (SEC) or the Commodity Futures Trading Commission (CFTC) has a regulatory primacy.
Inherent in this debate on how projects are deemed decentralized. Most of the industry should be the Howy test, a 79 -year -old judicial framework to determine if something is security, is exceeded with regard to crypto. But finding an appropriate replacement that allows innovation, while ensuring that real titles adhere to the law, is essential.
Most recent draft of the Clarity Act, legislation on the structure of the market which pass The United States House of Representatives in July allows projects to self-certify as decentralized. Although it may seem positive, this could confuse what constitutes decentralization in the minds of regulators and industry. A better approach would be to create a language in the bill which focuses on decentralization according to the control of a given protocol. Ideally, I would also like to see the act Support community governance Projects by recognizing the vote and DAO based on tokens when there are major funds offered for a protocol.
This last part is particularly important given a growing trend of projects now avoid DAO governance under this new administration.
Look beyond the Platitudes
While we enter in the fall, the main decision -makers in Washington, DC, say all the good things, but decentralization remains in fact.
On July 31, the SEC revealed “Project crypto», A new initiative to rewrite obsolete rules to modernize digital asset legislation and bring us the financial markets on the financial markets. historically been hard on the cryptography industry, making a lot of height on the future of the crypto.
In accordance with this, Atkins pleaded for a “Innovation exemption», A policy that would allow new technological and commercial models by exempting them from having to comply with heavy regulatory requirements which do not perfectly match the existing rules and regulations of the SEC.
The terms “innovation“Or” Innovator “appears more than 20 times in the body of President Atkins’s speech announcing the Crypto project. He even went so far as to say:” The dry will not remain strewn and looks at the innovations developing abroad while our capital markets remain stagnated. “”
And yet, on August 6, a little less than a week after Atkins unveiled the Crypto project, a novel Storm, co-founder of Tornado Cash, a privacy protocol which breaks the links between shippers and fund receivers, was sentenced For having knowingly operated on a silver issuer without license under the United States Ministry of Justice (DOJ), sending cooling in the industry.
Why decentralization is important
The word “decentralization” is often thrown these days, and it is important to remember why it is essential. Decentralization modifies the dynamics of power: it prevents a single entity or a government from dictating rules, distorting markets or entering funds. Decentralization is democratic: it promotes user control, transparency, responsibility and resilience. Indeed, the American constitution itself – with its controls and counterweights, the separation of powers between the branches of the government and its deliberate protection of individual rights – is an example of decentralization in progress and very successful.
Nominal support for crypto, such as the subscription of a Bitcoin Treasury CompanyDo not make someone a champion of decentralization. Put Bitcoin in a centralized company and let people buy actions rather than having Bitcoin itself makes decentralization of the chain useless.
A Bitcoin Strategic Reserve It is not much better, exchanging ownership of a centralized company for the custody of a central government.
It is not enough that decentralization is simply a distant objective that the regulated one -day entities should achieve. By continuing to tolerate centralized structures disguising itself behind promises of future decentralization, the industry may make this error one last time.
Alexander Urbelis is an internationally recognized technological lawyer and cybersecurity expert, professor of law at King’s College in London, and the Advocate General / Ciso of the Ethereum names service. Setting the gap between legal and technical expertise, Alex is also the architect of an awarded platform for cyber-men’s intelligence designed to identify the characteristics of imminent cyber attacks, counterfeiting and other malicious activities.
