Source: Cointelegraph Original: "{title}"
Views from: Alexander Sudeykin, Co-founder of Evaa Protocol
Many once believed that capitalism would be a force for innovation and personal freedom. But to be honest, it has not lived up to expectations recently. Big fish in various industries continue to swallow small fish, and they have enough political influence to set the rules of the game in their favor.
This is why DeFi seems so refreshing. It offers us a chance to press the reset button by making the market fair and open, rather than favoring a privileged few. In a perfect world, the transparency and inclusive structure of DeFi could restore confidence in the power of voluntary exchange. However, as this industry grows and regulators begin to take notice, whether it can maintain these founding values or become similar to the system it was meant to replace remains a question.
DeFi is a free market revolution in finance
As a $123.5 billion industry, DeFi replaces traditional trusted intermediaries with composable decentralized applications (DApps) and protocols using smart contracts. You no longer need to fill out cumbersome forms or go through application procedures to access the services you need. People can borrow stablecoins, farm liquidity provider tokens, or swap tokens by interacting with DApps' smart contracts from anywhere in the world at any time.
DeFi is different from traditional finance—there are no gatekeepers. Anyone with an internet connection and compatible device can join the ecosystem and use or develop protocols. Through composable, open-source protocols, developers can reuse parts (or even all) of existing DApps or build their own solutions based on other applications. These open, permissionless financial services create fair market conditions for all market participants and elevate competition to a whole new level.
DeFi protocols are also non-custodial. People maintain complete control over their assets by interacting with smart contracts through self-custody wallets. The removal of counterparty risk enhances personal freedom through actual ownership of assets and prevents interference from third parties like banks or other custodial financial institutions, such as frozen accounts.
To be honest: DeFi is not perfect. It is still in its early stages, which means it comes with various potential pitfalls—such as smart contract vulnerabilities and impermanent loss. Even so, this "new type" of capitalism indeed has the potential to solve some of the biggest challenges in traditional finance. Of course, it also has its own challenges—ones that need to be addressed by the community and developers for DeFi to truly evolve independently.
The threat of excessive regulation from the IRS
Regulation has always been a significant barrier to realizing capitalism's full potential, and now it threatens the development of DeFi. The IRS recently issued rules requiring decentralized exchanges to report transactions like brokers, which will take effect in 2027.
The problem is that these requirements for non-custodial platforms (which operate independently) are inconsistent with the concept of decentralization. Moreover, this could scare off developers, forcing them to migrate to countries with simpler rules. This threatens the very essence of the free market that DeFi relies on and could potentially centralize everything back into the hands of centralized structures.
At the core of DeFi is freedom: free markets, autonomous success, independence. It breaks the past model where everything was controlled by a few big players and opens up new possibilities. It’s no wonder that market participants like Consensys and Uniswap oppose these new regulations. Some have even called for Congress to overturn the IRS rules.
If these rules are too strict, they will drown out all the advantages of DeFi. Therefore, it is better to seek new ways to support the development of this industry and provide space for its growth. After all, DeFi is not just about money; it is about giving people the opportunity to feel more financially free and confident.
A new manifestation of capitalism
Due to regulatory uncertainty in the U.S., multiple cryptocurrency and DeFi projects have been forced to seek more friendly jurisdictions—such as the UAE, Switzerland, and Singapore. If this trend continues, the global digital asset market will lose the leadership of the world's largest economy, hindering its development.
What exactly is happening? Regulators are not adjusting the rules based on the new reality but are trying to fit decentralized technology into the framework of the old system. The issue is not just about cryptocurrency. It concerns the future of all technologies that are not under centralized control. How do you regulate something that breaks the mold? The answer is to find a balance. Otherwise, stagnation will ensue.
Trump's pro-cryptocurrency stance gave people some hope, but DeFi projects already need to adapt: migrate to friendlier countries, achieve decentralized governance through decentralized autonomous organizations (DAOs), or find ways to maintain the spirit of decentralization in new environments.
DeFi is not just a clever tool—it is an economic philosophy rooted in freedom, openness, fairness, and true financial sovereignty. In a sense, DeFi perfectly aligns with capitalism, reinforcing each other's core ideals.
It is a new face of capitalism, aimed at eliminating monopolistic power, decentralizing financial control, and restoring honest competition. This is precisely what decentralized finance promises: the opportunity to restore the spirit of true market fairness.
For DeFi to thrive, regulators should create policies that protect consumers while allowing market participants to continue driving the development of decentralized technology. Finding this balance will protect users and maintain the U.S. position at the forefront of the crypto industry, rather than handing leadership to countries that are more adventurous and forward-thinking.
Views from: Alexander Sudeykin, Co-founder of Evaa Protocol
Related: Ethical finance must guide the development of cryptocurrency
This article is for general informational purposes only and should not be considered legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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