The news that about $2.8bn of stolen funds from the Binance hack was frozen and ultimately returned to Binance came as a relief to meant but it also begs the question "is cryptocurrency not decentralized anymore?" What would happen if a false alarm or a malfunction falsely identifies a random institution's holdings as fraudulent?
It seems to me that another question is emerging here: has the decentralization of these currencies become a "pretty" facade for actual centralization? How will these contradictory double standards "coexist" with the original concept behind these cryptocurrencies? In other words, are they decentralized in some instances, yet become centralized in others?
I have always thought crypto to be my finances in my hands, free from outside influence, I don't have to cue at a bank or answer to any institution before I get access to my holdings, but it seems that times are changing faster than we can keep up with.
Well, cryptocurrencies (and certain others, like XMR) remain your own property, at least until malicious actors gain access to them. But as you noted, times are changing; in the future, regulators may mandate the reporting of such assets or even require them to be held by regulated intermediaries, such as exchanges or brokers. (In fact, this is already the case in some countries, where there is a requirement to report the ownership of cryptocurrencies.) Of course, this only applies if you hold the cryptocurrency directly, rather than through an intermediary like Binance.
What does this mean for cryptocurrency and it's original vision?
I believe that the stablecoins in question, Tether and Circle (with over $2.3 billion frozen), never incorporated decentralization into their core concept. Meanwhile, Ripple, which has long been accused of being centralized, somehow failed (or perhaps chose not) to freeze the 233.46 million XRP tokens siphoned off by a hacker during the Binance hack.
