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Fed’s 2025 rate cuts: How they shape stocks, gold and crypto

Fed’s 2025 rate cuts: How they shape stocks, gold and crypto

Over the weekend, fresh headlines hinted that President Donald Trump’s much-discussed reciprocal tariffs, slated for April 2, might not be the broad, blunt instrument markets initially feared. Instead, they could be more targeted, potentially easing some of the anxiety that’s kept investors on edge. But let’s not kid ourselves—the situation remains fluid, and a major risk still looms large. Markets hate uncertainty, and this story is far from written.

Last week offered a glimpse into how these dynamics are playing out. The Federal Open Market Committee’s (FOMC) latest dot plot stuck to its script, signalling expectations of two rate cuts this year despite a bump in near-term inflation projections from 2.5 per cent to 2.8 per cent.

That’s a notable shift—it suggests the Fed sees price pressures sticking around a bit longer than anticipated. Meanwhile, the median growth forecast took a hit, sliding from 2.1 per cent to 1.7 per cent, a clear nod to the mounting headwinds facing the US economy.

Friday’s market action encapsulated the mood: equities spent most of the day in the red, only to be yanked into positive territory by a late rally from mega-cap tech giants, nudging the S&P 500 up 0.1 per cent by the close. It’s a classic case of the market’s bipolar nature—pessimism giving way to a flicker of optimism driven by a handful of heavyweights.

The bond market, meanwhile, told its own story. The US Treasury yield curve steepened, with long-end yields creeping higher after Fed Governor Christopher Waller suggested the banking system still has plenty of reserves to handle the Fed’s ongoing Treasury runoff without disruption. The 10-year yield edged up 0.9 basis points to 4.246 per cent, reflecting confidence in the longer-term outlook.

At the front end, however, yields dipped—the 2-year yield fell 1.6 basis points to 3.948 per cent—as markets priced in more Fed easing to come. It’s a delicate balancing act: the Fed resisting short-term pressure to pivot aggressively while signalling it’s not blind to the softening growth picture.

The US Dollar Index, up 0.2 per cent to 104.09, notched its first weekly gain in three weeks, a subtle flex of muscle amid the uncertainty. Commodities offered a mixed bag: gold, often a safe-haven darling, shed 0.7 per cent as profit-taking kicked in, while Brent crude eked out a 0.2 per cent gain, buoyed perhaps by geopolitical jitters or steady demand signals.

Over in Asia, the MSCI Asia ex-Japan index dropped 0.9 per cent on Friday—its third straight day of losses—dragged down by tariff fears, though it still managed a 1.22 per cent weekly gain. Chinese tech stocks weren’t so lucky; profit-taking hammered the Hang Seng and CSI 300, which slumped 2.19 per cent and 1.52 per cent, respectively, as investors cashed out amid the overhang of potential trade disruptions.

Looking ahead, this week’s economic calendar is packed with potential market movers. Friday’s US Personal Consumption Expenditures (PCE) data—the Fed’s preferred inflation gauge—will be the headliner, offering fresh clues on whether those upwardly revised inflation projections hold water.

Earlier in the week, the UK’s February CPI on Tuesday and Tokyo’s March CPI on Friday will shed light on global price trends. Stateside, the Congressional Budget Office’s debt ceiling estimate on Wednesday could stir the pot, especially with the Treasury’s cash pile under scrutiny.

And let’s not forget the steady drumbeat of Fedspeak—comments from Fed officials could either soothe or spook markets, depending on their tone.

Asia’s in the spotlight too. The China Development Forum, which kicked off in Beijing on Sunday and wraps up today, Monday, March 24, has drawn global business leaders eager to gauge China’s next moves. Some are slated to meet President Xi Jinping later this week, a rare chance to take the pulse of China’s leadership amid trade tensions. Early trading in Asian equities today has been a mixed bag, reflecting the push and pull of optimism over narrower tariffs and lingering unease about what’s next.

Then there’s the crypto angle, which has been lighting up financial headlines. Bitcoin, XRP, and Solana (SOL) kicked off Monday with gains, riding a wave of positivity tied to those reports of more targeted Trump tariffs. Bitcoin’s hovering around US$86,500, up 2.7 per cent in the last 24 hours, while SOL’s outpacing the pack with a near six per cent jump to US$138. The S&P 500 futures are cheering, too, pointing to a higher open for US stocks.

It’s tempting to see this as a sign that Bitcoin may have found a floor, with some analysts eyeing a rebound toward US$90,000 if tariff fears continue to ease and the Fed holds steady. Trump’s signalling of a lighter touch on trade and the Fed’s resistance to knee-jerk rate cuts last week seems to have injected a dose of cautious optimism into the crypto space.

Michael Saylor’s MicroStrategy is another piece of this puzzle. The company’s CEO has been dropping hints via his “Saylor Bitcoin Tracker” posts on X, a reliable signal that more Bitcoin buys are coming. Sure enough, the word is that MicroStrategy might announce a massive purchase—potentially 500,000 BTC, worth billions—tomorrow morning.

Saylor’s strategy of scooping up Bitcoin during dips has turned MicroStrategy into a crypto behemoth, with its holdings currently valued at US$8.73 billion, down from a peak of US$19.50 billion. It’s a bold bet on Bitcoin’s long-term value, and if this rumoured US$21 billion acquisition pans out, it could light a fire under the market just as sentiment starts to thaw.

Fidelity Investments is making waves too, stepping into blockchain tokenisation with a filing to register a tokenised version of its US dollar money market fund on the Ethereum network. Submitted last Thursday to the SEC, the plan involves a new “OnChain” share class for its US$80 million Fidelity Treasury Digital Fund, mostly made up of US Treasury bills.

It’s a move that echoes efforts by BlackRock and Franklin Templeton, signalling that traditional finance is increasingly cozying up to blockchain’s promise of transparency and efficiency. If approved, it could mark a turning point for how institutional money flows into digital assets.

Ethereum itself is a bit of a paradox right now. The price has been sliding—down over 51 per cent from its December peak of US$4,100 to around US$2,000—yet so-called “Ethereum whales” are quietly stacking their bags. Glassnode data shows wallets holding at least US$100,000 worth of ETH jumped from 70,000 on March 10 to over 75,000 by March 22, a stark contrast to the 146,000 seen when ETH was flying high in December. Analysts are eyeing a potential breakout to US$2,200 if buying pressure builds, but for now, ETH’s stuck in a rut, caught between whale accumulation and broader market malaise.

The prospect of more targeted tariffs is a lifeline for markets desperate for clarity, but the risks haven’t vanished—they’ve just shifted shape. The Fed’s juggling act—balancing inflation worries with growth concerns—keeps everyone guessing, and this week’s data could tip the scales either way.

Crypto’s riding a wave of cautious hope, bolstered by big players like Saylor and Fidelity, but it’s tethered to the same macro uncertainties as equities and bonds. Asia’s fate hinges on how China navigates this tariff tightrope, and the US debt ceiling looms as a wildcard. It’s a high-stakes game, and while the pieces are moving, the board’s still a mess.

 

Source: https://e27.co/feds-2025-rate-cuts-how-they-shape-stocks-gold-and-crypto-20250324/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

These Countries Are Not Very Crypto Friendly, But They Might Surprise You In 2024

These Countries Are Not Very Crypto Friendly, But They Might Surprise You In 2024

Cryptocurrencies are a new and disruptive technology that challenges the status quo and the established order of the world. While some countries have welcomed the innovation and opportunity that crypto offers, others have been more resistant or even hostile. The reasons for this hostility vary from country to country, but they often include factors such as:

One of the main reasons why some governments and central banks are reluctant or hostile towards cryptocurrencies is the fear of losing control over the monetary system and the economy. Cryptocurrencies are decentralized and peer-to-peer, meaning that no single entity can manipulate or interfere with the supply, demand, or value of the digital assets. This challenges the traditional role and power of governments and central banks to manage the money supply, influence interest rates, and stimulate or restrain economic activity.

Another reason is the concern about the security and stability of the financial system and the national currency. Cryptocurrencies are volatile and unpredictable, subject to market forces and speculation. They also pose a threat to the dominance and sovereignty of national currencies, especially in countries with weak or unstable currencies. Additionally, cryptocurrencies are vulnerable to cyberattacks, hacking, theft, and fraud, which could undermine the confidence and trust in the financial system.

A third reason is the worry about the legal and regulatory implications of crypto, such as taxation, consumer protection, and anti-money laundering. Cryptocurrencies operate outside the existing legal and regulatory frameworks, creating challenges and uncertainties for governments and regulators. How to tax crypto transactions and income, how to protect consumers from scams and losses, how to prevent money laundering and terrorism financing, and how to enforce compliance and accountability are some of the questions that need to be addressed.

A fourth reason is the lack of understanding and awareness of the benefits and potential of crypto. Many governments and central banks are not well-informed or educated about the advantages and opportunities that cryptocurrencies and blockchain technology offer. They may not fully grasp the innovation, efficiency, transparency, inclusivity, and empowerment that crypto can bring to various sectors and domains of society.

A last reason in my humble opinion is the preference for a centralized and hierarchical model of governance and authority. Cryptocurrencies are based on a distributed and democratic model of consensus and participation, where anyone can join, contribute, verify, and validate transactions. This contrasts with the centralized and hierarchical model of governance and authority that most governments and central banks are accustomed to and comfortable with.

Despite all the obstacles, the cryptocurrency market has been growing rapidly in the past few years, attracting investors, innovators and enthusiasts from all over the world. Bear in mind that not all countries have embraced this new form of money with the same enthusiasm and openness. Some governments have imposed strict regulations, bans or restrictions on the use, trade or mining of cryptocurrencies, citing concerns over money laundering, tax evasion, financial stability or national security.

In this article, I will explore some of the countries that are currently not very crypto-friendly but may become more so shortly.

China

China has been one of the most influential and controversial players in the crypto space, as it is home to some of the largest mining pools and exchanges in the world. However, the Chinese government has also been cracking down on the crypto industry since 2017, when it banned initial coin offerings (ICOs) and shut down domestic exchanges. In 2021, China intensified its efforts to curb crypto activities, banning financial institutions and payment platforms from providing services related to cryptocurrencies and launching a nationwide campaign to shut down mining operations. The Chinese authorities have cited environmental, financial, and social risks as the main reasons for their harsh stance on crypto.

However, some analysts believe that China may soften its attitude towards crypto in the future, as it seeks to promote its digital currency, the digital yuan, which is currently being tested in several cities and regions. The digital yuan is a central bank digital currency (CBDC) that aims to enhance the efficiency and security of the payment system, while also giving the government more control and oversight over the money supply and transactions. Some experts suggest that China may allow some degree of interoperability between the digital yuan and other cryptocurrencies, especially those that are compliant with its regulations and standards. This could create new opportunities for innovation and collaboration in the crypto space and increase the global adoption and influence of the digital yuan.

India

India is another country that has a large and vibrant crypto community but also faces significant regulatory uncertainty and challenges. India has not officially banned cryptocurrencies, but it has also not recognized them as legal tender or regulated them as assets or commodities. The Reserve Bank of India (RBI), the central bank, has issued several warnings and circulars to discourage banks and financial institutions from dealing with crypto-related businesses or individuals, creating difficulties for crypto exchanges and users to access banking services. I remember that RBI issued a directive prohibiting banks from providing services to crypto entities, effectively cutting off their lifeline. However, after approximately 2 years, the Supreme Court of India overturned this directive, ruling that it was unconstitutional and disproportionate.

Since then, the crypto industry in India has seen a resurgence of growth and activity, as more investors, traders and startups have entered the market. The legal status of cryptocurrencies remains unclear and ambiguous, as the government has been deliberating on a draft bill that proposes to ban all private cryptocurrencies in India, except for those issued by the state. The bill also proposes to create a framework for a CBDC, similar to China’s digital yuan. The bill has not been introduced or passed by the parliament yet, but it has created a lot of anxiety and confusion among the crypto community in India.

Some observers believe that India may not go ahead with such a drastic measure, as it would stifle innovation and growth in one of the most promising sectors of the economy. Instead, they argue that India may adopt a more balanced and nuanced approach to regulating cryptocurrencies, taking into account their potential benefits and risks. They point out that India has a strong tradition of entrepreneurship and technology development, and that it could leverage its talent and resources to become a leader in the crypto space. They also suggest that India may explore ways to integrate its CBDC with other cryptocurrencies, especially those that are aligned with its national interests and values.

Brazil

Brazil is another country that has a large and active crypto community but also faces some regulatory hurdles and challenges. Brazil does not have a specific law or regulation for cryptocurrencies, but it treats them as assets subject to capital gains tax and reporting obligations. The Central Bank of Brazil (BCB), the securities regulator (CVM) and other authorities have issued several guidelines and warnings to inform and protect investors and consumers from the risks associated with cryptocurrencies. However, they have also recognized their potential for innovation and inclusion in the financial system.

However, Brazil has also faced some political and economic instability in recent years, which has affected its crypto industry. Mercado Bitcoin had intended to launch its fintech expansion in 2021 but faced delays due to regulatory approval. On the day this announcement was made, Mercado Bitcoin was instructed to return more than 2,182 Bitcoin (BTC), valued at $59.3 million at the current time, to a group of investors. The allegations stated that a co-founder and former executive had allegedly held back funds in a falsified hacking incident back in 2013. In 2023, the Brazilian Senate approved new income-tax regulations that could mean citizens will face paying up to 15% on earnings from cryptocurrencies held on international exchanges, creating a compliance burden for the crypto industry.

Experts believe that Brazil may become more crypto-friendly in the future, as it seeks to improve its economic and social conditions. They note that Brazil has a large and young population, with high levels of internet and smartphone penetration, which creates a huge demand and opportunity for digital and financial inclusion. They also highlight that Brazil has a vibrant and diverse crypto ecosystem, with many startups, projects and initiatives that are developing innovative solutions for various sectors and segments of society. They also point out that Brazil may benefit from the regional and global trends in the crypto space, such as the adoption of Bitcoin as legal tender by El Salvador, or the development of CBDCs by several countries. They suggest that Brazil may adopt a more proactive and supportive stance towards cryptocurrencies, as it recognizes their potential for economic growth and social development.

Russia

Russia is another country that has a mixed attitude towards cryptocurrencies. The country has not banned crypto outright but has also not recognized it as legal tender or property. The Russian government has issued various warnings and guidelines about the risks and liabilities of using crypto but has also acknowledged its potential for innovation and development.

The Russian parliament has passed a law that defines crypto as a type of digital asset that can be used for transactions, but only through authorized operators. However, in my perspective, Russia might surprise the world in 2024 by becoming more crypto-friendly and open to the adoption and integration of technology. One reason for this could be the geopolitical implications of crypto, which could offer Russia an alternative to the US dollar and other Western-dominated currencies. Another reason could be the cultural affinity of Russians for crypto, which reflects their values of freedom, independence, and creativity.

In conclusion

Cryptocurrencies are a complex and controversial phenomenon that has different impacts and implications for different countries. Some countries are not very crypto-friendly now, but they might surprise us in 2024 by adopting a more open and positive attitude towards crypto.

This could happen for various reasons, such as:

– The realization that crypto is an inevitable and unstoppable trend that offers many benefits and opportunities for innovation, growth, and inclusion.
– The recognition that crypto is a competitive advantage and a strategic asset that can enhance the economic and geopolitical position of a country in the global arena.
– The adaptation and improvement of the legal and regulatory frameworks to accommodate and facilitate crypto activities, while ensuring the security and stability of the financial system and the national currency.

Therefore, we should not dismiss or underestimate the potential of crypto to transform the world and the future. We should also not assume that the current stance of some countries towards crypto is fixed or irreversible. Rather, we should keep an open mind and a curious eye on how the crypto landscape will evolve and change in the next few years.

 

Source: https://in.investing.com/analysis/these-countries-are-not-very-crypto-friendly-but-they-might-surprise-you-in-2024-200604991

What Factors Drive Governments' Hostility or Reluctance Toward Cryptocurrencies?

Anndy Lian highlighted that governments and central banks exhibit reluctance towards cryptocurrencies due to fears of losing control over the monetary system, security concerns, legal implications, lack of understanding of crypto's benefits, and a preference for centralized governance models.

How Has China's Stance on Cryptocurrencies Evolved, and What Might the Future Hold?

China has a historically strict stance on crypto, citing environmental and financial risks. However, experts speculate a potential softening as China explores its digital currency (digital yuan) and potential interoperability with compliant cryptocurrencies.

What Challenges Does India Face Regarding Cryptocurrency Regulations?

India grapples with regulatory uncertainty despite a vibrant crypto community. Legal ambiguity persists despite a Supreme Court ruling against the Reserve Bank of India's directive, creating anxiety and confusion within the Indian crypto sphere.

What's the Regulatory Landscape for Cryptocurrencies in Brazil?

Brazil views cryptocurrencies as assets subject to taxation and regulations. Political and economic instability in recent years has led to regulatory delays and compliance burdens for the crypto industry.

How Does Russia's Approach to Cryptocurrencies Differ from Other Nations?

Russia demonstrates a mixed attitude, acknowledging crypto's potential while issuing warnings about its risks. Speculation suggests Russia might embrace a more crypto-friendly approach in 2024 due to geopolitical considerations and cultural inclinations.

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Web3 Wallets and Centralization: Can They Coexist?

Web3 Wallets and Centralization: Can They Coexist?

Web3 wallets have become a crucial tool in the new era of the Internet, where decentralization, blockchain, and cryptocurrencies are at the forefront of innovation. A Web3 wallet, also known as a crypto wallet, is a digital wallet that enables users to store, send, and receive cryptocurrencies, interact with smart contracts, transact NFTs, and access dApps on different blockchains.

As the use cases of Web3 wallets continue to expand, the question of whether centralization can play a role in managing these wallets arises. I will explore the concept of Web3 wallets managed by Centralized Exchange (CEX) and discuss whether it aligns with the principles of Web3.

What Is CEX + Web3 Wallet?

CEXs (centralized cryptocurrency exchanges) act as intermediaries for buying, selling, and trading cryptocurrencies in a centralized manner. They offer a user-friendly platform where users can conduct various cryptocurrency transactions. However, users must trust the exchange to manage their funds securely, as the exchange controls the wallets.

Web3 wallets provided by CEXs claim to integrate with decentralized ecosystems and allow interactions with dApps and blockchains. Despite this claim, the underlying nature of these wallets remains centralized, as the exchange retains control over users’ private keys and funds.

web3 app download

The centralization aspect of CEXs extends to their Web3 wallets in various ways:

  1. Users entrust the exchange with storing and managing their private keys, relying on the exchange’s security measures.
  2. The infrastructure supporting Web3 wallets, such as servers and network nodes, is owned and operated by the centralized exchange.
  3. Transactions from CEX’s Web3 wallets undergo internal approval and validation before being broadcasted to the blockchain, introducing a centralized control point.

For users seeking decentralization and full control over their funds, self-hosted software wallets or hardware wallets may be more suitable.

While Web3 wallets and centralization can coexist to some extent, the level of centralization varies depending on specific implementation and design choices by wallet providers. Understanding this relationship can shed light on how these elements interact.

Case Studies

Let me share some examples:

Case Study 1: OKX Wallet

OKX, a well-known player in the Web3 technology space and the second-largest cryptocurrency exchange in terms of trading volume, recently unveiled a significant upgrade to its OKX Wallet. This upgrade introduces groundbreaking features that position it as the first Web3 wallet to integrate advanced multi-party computation (MPC) technology.

Integrating MPC technology into the OKX Wallet eliminates the need for traditional key and seed phrase storage methods. Instead, the user’s private key is divided into three parts, significantly enhancing security and reducing the risks associated with a single point of failure. Leveraging MPC ensures that users retain complete control over their wallet assets while enjoying the highest level of security.

OKX Wallet operates as a fully decentralized and non-custodial solution, empowering users with full ownership and control over their funds. Unlike centralized exchanges, OKX does not hold users’ assets, creating a secure environment that allows individuals to have custody of their cryptocurrencies.

The wallet offers multi-blockchain support and automatically recognizes and connects to supported networks, providing a convenient solution for users engaged in decentralized finance (DeFi), non-fungible tokens (NFTs), and decentralized applications (DApps).

The upgraded OKX Wallet introduces an innovative asset recovery feature called “independent Emergency Escape,” revolutionizing the recovery process. In critical situations, users can regain access to their assets through using two out of three access credentials: a device, a cloud backup, or an OKX account login. This unique feature enhances user security and autonomy, allowing individuals to regain control of their assets without relying on OKX’s involvement.

In addition to its robust security features, the OKX Wallet provides complete control and ownership of funds, facilitating faster withdrawals without withdrawal approval. The wallet allows seamless management of multiple chains, eliminating the need for manual network switching.

Users can import multiple seed phrases and derive addresses within the wallet. Easy connectivity is ensured through the OKX Wallet web extension and dedicated iOS and Android mobile apps. Integration with the OKX DEX, an integrated decentralized exchange aggregator, enables multi-chain and cross-chain transactions.

Case Study 2: Bitverse

Introducing Bitverse, an innovative MPC + AA Wallet leading the way in building the “Credit Creates Wealth” Web3 ecosystem. Bitverse combines artificial intelligence, Oracle credit protocols, and advanced cryptographic techniques to create a secure, decentralized, and user-friendly environment for controlling and managing assets.

It aims to promote user engagement and loyalty with engaging features like lucky packets, event guessing, non-fungible tokens (NFTs), and airdrop tools. We will explore the key advantages and how it is shaping the landscape of Web3.

One of the primary advantages is its implementation of the Bitverse Credit Protocol (BCP) and Credit Oracle. BCP is a decentralized credit protocol that leverages AI and Oracle technology. It establishes a hybrid credit system (OCC + RWC) that operates on both the blockchain and off-chain.

Extending credit capabilities to both realms ensures that credit is accessible and convenient for all industry members and users. This innovative approach addresses common pain points in the industry, such as low fund utilization and limited benefits for high-credit users.

To achieve robust security, it employs MPC. It also prioritizes convenience for its users and incorporates a secret key partition management system with cryptography principles, zero-knowledge proofs, trusted execution environments (TEE), and robust authentication mechanisms.

In its development, it is actively working on an Account Abstraction (AA) wallet that supports non-main chain currencies. This AA wallet enables users to pay gas fees using alternative tokens. For compatibility, it supports single-signed wallets using traditional mnemonic phrases. This compatibility ensures a seamless transition for users already familiar with existing Web3 wallet practices while expanding the user base.

With its unique features and user-centric approach, it is shaping the future of decentralized finance and revolutionizing how users control and manage their assets in the digital world. It’s worth noting that Bitverse is integrated into the Bybit exchange, further expanding its reach and capabilities.

Can CEXs Manage Web3 Wallets?

The examples provided above serve to illustrate two distinct aspects. The first example showcases how a CEX can develop its own Web3 solution, while the second demonstrates the integration of a third-party solution. Both integrations have their merits and represent a positive step towards enabling users to experience the functionality of Web3.

In contrast, Web3 is founded on the principle of decentralization, ensuring that no single entity maintains control over the network. Decentralization enhances security, transparency, and resilience against attacks by eliminating a central point of failure.

So, can CEXs manage Web3 wallets? Technically, the answer is yes, but it contradicts the principles of Web3. When users entrust their assets to a CEX-managed Web3 wallet, they place their faith in the CEX, which undermines the concept of decentralization.

CEXs have a history of security breaches, and if it is hacked or goes bankrupt, users may permanently lose their funds. Moreover, they may impose restrictions on users’ funds, such as freezing or seizing them, which contradicts the financial sovereignty that Web3 aims to achieve.

Another concern with CEX-managed Web3 wallets is the risk of censorship. They may comply with government regulations and limit users’ access to specific decentralized applications (dApps) or blockchains, eroding the idea of an open and permissionless internet envisioned by Web3 further.

However, it is essential to note that not all CEXs are identical. Some have taken steps towards decentralization by adopting non-custodial features, enabling users to retain control over their private keys and assets while benefiting from the user-friendly interface of a centralized exchange.

Many also offer cross-chain interoperability, allowing users to access multiple blockchains from a single platform, which can be convenient for those who trade various cryptocurrencies. Nevertheless, despite these efforts, CEX-managed Web3 wallets still diverge from the core principles of Web3.

In Conclusion

Web3 wallets managed by CEXs may offer a user-friendly interface for cryptocurrency trading and accessing different blockchains, but they deviate from the fundamental principles of Web3. Decentralization is a pivotal aspect of Web3, distinguishing it from traditional Internet and financial systems.

While Web3 wallets and centralization can coexist, users should be cognizant of the degree of centralization involved and make informed decisions based on their priorities. For users seeking decentralization, the ideal scenario entails utilizing wallets prioritizing client-side control, locally stored private keys, and open-source code allowing independent verification.

The usual “Anndy Lian” quote to end the article: “Whether championed by a centralized or decentralized entity, this is the journey of Web3. We must respect this entire process.”

Source: https://www.financemagnates.com/cryptocurrency/web3-wallets-and-centralization-can-they-coexist/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j