As many have seen recently, the SEC is going after Coinbase for preparing to launch a lending platform. There are other platforms like Blockfi who are also seeing restrictions in the US. Let’s dive into this and why I don’t think it matters that CeFi is having problems.
9:51 Centralized Finance
Many other platforms like Nexo, Celsius, and Crypto.com are likely to face the same fate and the point is simply that centralized financial platforms or CeFi will always end up with issues like these. A lot of this comes back to one simple issue. Are you leaving your cryptocurrency on exchanges or platform that control your cryptocurrency?
If you are leaving your crypto on these lending platform because you feel they are “safe,” then think again. Your earnings may all be taxed and you may run into many issues later down the road. This is why it’s so important to stake cryptocurrency from a wallet you control or to provide liquidity anonymously through smart contracts. This makes all the difference for ownership, security, taxation, and more.
By the way I am in no way recommending you do anything illegal tax wise, all I am saying is that you don’t have the option with anything in CeFi while there are many options out there in the world of DeFi.
This article and my thoughts are less about the case itself and more so on the general sentiment around these platforms. If we lose them, it’s not bad for the industry at all, in fact you’re not even making as much as you could lending as you could through other ways to earn passive income from cryptocurrency that you can in a decentralized way. Decentralization, anonymity, privacy, etc. are the values and the ethos of cryptocurrency, so sticking to that and not allowing centralized platforms to run everything is ideal.
Platforms and services like stock exchanges that sell direct crypto (which really don’t) like Robinhood or Wealthsimple as well as payment processors like Paypal who let you only buy and sell but not transact freely or truly own your cryptocurrency only hold people back from what is meant for. I thank them for the publicity, but you need to understand that all these centralized financial services are the original problem that we are solving with cryptocurrency.
What do you think about crypto lending? How do you earn crypto passively? What are your thoughts on CeFi and Defi? What do you think about the SEC case against Coinbase? Let me know what you think about this in the comments below and don’t forget to subscribe!
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About Scott Cunningham
I am the host of Crypto & Things and a huge social blockchain enthusiast using what I believe to be the next level of social communication. I make educational content, review platforms, and share my passive & crypto income journey.