Comparing TradFi, CeFi, and DeFi BFC Practice Questions (Page 4)

Questions 16–20

1. 16foundation · easy

   Which of the following is a key regulatory difference between TradFi and DeFi?

   • ABoth TradFi and DeFi are subject to the same regulatory framework and compliance requirements.
   • BTradFi institutions are subject to licensing and oversight by financial regulators, while DeFi protocols often operate without a central entity to regulate.
   • CDeFi protocols are required to obtain banking licenses, while TradFi institutions are exempt from regulation.
   • DTradFi is completely unregulated, while DeFi is strictly regulated by international bodies.
   Reveal Solution Discussion Select an answer first
2. 17foundation · easy

   Which of the following is a typical use case for CeFi?

   • ADepositing funds into a savings account at a commercial bank.
   • BBuying and selling cryptocurrencies on a platform that provides an order book and holds customer funds.
   • CIssuing a corporate bond through an investment bank.
   • DCreating a smart contract to automatically swap tokens on a decentralized exchange.
   Reveal Solution Discussion Select an answer first
4. 18application · medium

   An institutional investor is comparing the security profiles of TradFi, CeFi, and DeFi for a large digital asset portfolio. They are particularly concerned about the risk of a single point of failure and the ability to recover funds in case of a hack. Which model presents the highest systemic risk due to concentration?

   • ATradFi, because banks are too big to fail.
   • BCeFi, because centralized exchanges hold large amounts of user funds in one place.
   • CDeFi, because smart contracts are immutable.
   • DAll models have equal systemic risk.
   Reveal Solution Discussion Select an answer first
5. 19application · medium

   A non-profit organization wants to provide financial services to refugees who lack government-issued IDs and bank accounts. The organization is comparing TradFi, CeFi, and DeFi options. Which model is most likely to offer the lowest barrier to entry for this population?

   • ATradFi, because banks offer basic accounts that require minimal documentation.
   • BAll three models offer identical accessibility because they all require internet access.
   • CCeFi, because exchanges often have simplified onboarding for unbanked users.
   • DDeFi, because users only need an internet connection and a cryptocurrency wallet, which can be created without ID verification.
   Reveal Solution Discussion Select an answer first
6. 20expert · hard

   A central bank is evaluating whether to build a central bank digital currency (CBDC) on a permissioned blockchain or to use a public DeFi infrastructure. The central bank requires full control over monetary policy, privacy for transactions, and resilience against single points of failure. Which infrastructure choice best meets these requirements?

   • AA public DeFi infrastructure, because it is decentralized and resilient, but it lacks the control and privacy the central bank needs.
   • BA centralized database, because it is the only way to ensure full control and privacy.
   • CA permissioned blockchain controlled by the central bank, because it provides control and privacy, but it may introduce a single point of failure.
   • DA permissioned blockchain with multiple independent nodes operated by different entities, because it provides control, privacy, and resilience.
   Reveal Solution Discussion Select an answer first