'Regulating of Crypto Exchanges: What Does it Mean For Crypto and DeFi?' by finanzsache crypto cryptocurrency
Most believe that regulation goes against the spirit of cryptocurrencies. And they are right about that. However, as you can see from some examples, a legal framework can indirectly help Bitcoin, Ethereum and other cryptocurrencies to get more popular and gain more acceptance.Cryptocurrencies - the new, unknown asset. At least in the eyes of regulators in the USA and Europe.
However, it is important to realize that regulation does not automatically mean regression. In fact, regulation can also mean progress - indirectly! On the other hand, it also ensures that funds and institutional investors get closer to the crypto topic and in some cases are even allowed to do so first.
So, as one of the most well-known exchanges in the world, Coinbase went to the SEC and informed the authority about their plans and asked for their assessment. The goal was to offer a lending product with 4% APY on the USD Coin . "Problem-free" in the sense of no teething problems. How it is to be judged legally, of course, remains an open question.By the way, the point here is not to highlight Coinbase in a big way. There is enough criticism of the exchange as well. However, the case is particularly well suited to demonstrate how much legal uncertainty there still is regarding these types of platforms.With Binance, Bison, and Kraken, the case may be clear.
DEXs are often inherently designed in such a way that they could fundamentally evade regulation. But what about KYC , deposit insurance or customer support then?Trading on a DEX is declared illegal if there is no centrally responsible entity.All DEX that want to survive become semi-centralized and are subject to the same laws and regulations as any other exchange.DeFi vs. the traditional financial system.
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