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Binance came under intense pressure after the Securities and Exchange Commission (SEC) filed a lawsuit against the company and its Chief Executive. The lawsuit will likely have no major impact on Binance since it has no major presence in the United States.
Still, the lawsuit could cause shivers in the crypto industry because of the strong market share that Binance. It also means that the SEC is keen on implementing regulations through lawsuits after its failure on FTX. This explains why the agency is still battling other centralized exchanges like Coinbase and Kraken.
DEX exchanges could benefit
Binance and other centralized exchanges will remain under scrutiny in the coming years. As we have seen with the SEC vs Ripple case, these cases can stay in court for a few years. Therefore, there is a possibility that some investors will decide to keep off the industry and CEX exchanges.
Decentralized Exchanges could benefit from the crackdown in CEX platforms like Binance and Coinbase. For starters, platforms like Uniswap and PancakeSwap are decentralized in nature and rely on their community members.
These members control most part of their operations, including fees, product listings, and even liquidity in their ecosystem, DEX differ from centralized platforms is that they don’t require user registration. Instead, they identify their users through their unique wallet addresses.
As such, from a regulatory standpoint, DEX pose the biggest threat compared to CEX platforms since they don’t do the KYC and AML procedures. CEX companies like Binance and Coinbase have implemented these processes.
Regulating DEX protocols will be much tougher because of how they operate. Some fully autonomous projects don’t have a single person of interest like Changpeng Zhao.
The same day the SEC sues @cz_binance@THORChain integrates $BNB
Now people can get $BNB in a decentralized, trustless, permissionless and censorship resistant way
Poetic justice. This is crypto and central planners can’t do shit about it.
— TCB (@THORmaximalist) June 5, 2023
DEX volume jumped
This situation explains why the volume in most DEX platforms jumped in the past 24 hours. Data compiled by CoinMarketCap shows that dYdX volume in the past 24 hours jumped by 165% to over $883 million.
DEX volume jumped
Sophisticated investors and traders love DEX platforms because, unlike CEX, they are open source and more transparent. As such, it easy to track movement of funds in these platforms.
Therefore, while DEX protocols are not perfect, there is a possibility that they will gain traction among users in the next few years. This traction has actually been rising following the collapse of FTX in 2022.
The post DEX volume in Uniswap, PancakeSwap, dYdX jumps after the SEC lawsuit appeared first on Invezz.
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