SEC wants to regulate DEXs | Bitcointalksearch.org

Abiky

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Quote from: The Sceptical Chymist on April 21, 2023, 01:10:48 AM

Definitely--but the government always goes too far when things might come down to legal issues. If things get challenged in the courts, no agency wants to have under-investigated or under-prosecuted its target. And I think the US government's attack on crypto has been way too aggressive as of late, considering that bitcoin has been around since 2009 and the main method of scamming and money laundering continues to be with fiat. They just don't want anything but the USD, you know?

It's a "battle" that's just getting started. The US knows crypto is a "force to reckon with", so it's doing everything in its power to minimize its usage across the country. Otherwise, that would mean the death of the US Dollar. DEXs were created as a response from governments' abusive overreach towards crypto users. They might be slow and expensive at times, but no single entity can shut them down thanks to the way they're designed (unless they're not truly-decentralized).

Tightening regulations from the SEC will result in a massive exodus of crypto companies from the US to other areas. US-based crypto customers will be the ones mostly affected when they find out how difficult it'll be to get in/out of crypto with US Dollars. P2P exchanges would be the only way to buy/sell crypto with USD. DEXs don't have Fiat on/off ramps, but they're still useful for crypto-to-crypto trades. I really hope crypto advocates win in the long run, leaving the US open for crypto business. No one can predict the future, so we can only hope for the best. Just my thoughts Grin

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Quote from: Abiky on April 19, 2023, 05:32:53 AM

I've read a news article from Reuters that the SEC (a US government agency) claims exisiting rules for exchanges also apply to decentralized exchanges (DEX). More details on that here: https://www.reuters.com/markets/us/us-sec-weigh-taking-more-feedback-plan-expand-exchange-definition-2023-04-14/

Does that mean the SEC will begin to enforce regulations on DEXs? Most of the so-called DEXs we know and love today are not as decentralized as they claim to be. Some have publicly-known developers, while others are hosted on centralized servers using centralized infrastructure. I fail to see how the SEC will succeed, especially when there's a small minority of DEXs that are truly-decentralized (it becomes difficult, if not impossible, to enforce regulations).

I've always known this will happen someday in the future, but I never thought it will be this early, lol. With the pace the regulatory and law firms were running behind cryptocurrencies and projects or platforms related to them were a clear indication that they will leave nothing behind, and now when they are about to target DEXs, it's pretty clear that they will leave absolutely no option left for privacy for the people.

We might find it bad since we are not criminals and all we want is privacy and control of our money, but they see it differently, for them, all of us are potential criminals and they find themselves to be in the right to have an eye on everything that we do, especially with our finances.

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Quote from: Abiky on April 20, 2023, 09:25:39 PM

At least, we have a small number of DEXs that truly deliver as promised. Ultimately, the SEC will give up once it discovers that it's impossible to take down the decentralized world of crypto/Blockchain tech. Who knows if this will make the industry bigger and stronger than ever? Just my thoughts Grin

Government restrictions will make the development of such projects slow and almost impossible because the government will follow the program's developer and the program will be open source and therefore needs a team of developers to avoid any software bugs, and do not forget that they will try to hide their identity and therefore the update of the codes will become impossible, not to mention the damage that the government may cause From blocking the range, tracking developers, searching for vulnerabilities and exploiting them.

If the platforms are closed-source, then they can leave honeypots and try to track individuals with new good locking high liquidity projects.

In short, this technology will not grow if government restrictions are placed.

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Quote from: logfiles on April 21, 2023, 06:07:55 PM

Quote from: tiCeR on April 21, 2023, 02:49:00 PM

<...>

To add to this, I believe the US administrators are worried that they are completely losing grip as a top Financial muscle worldwide. Implementation of very stringent measures is only going to push people to use crypto even more.

Right now, we have Countries like China ready to take over and break away from the US Monopoly of the Financial markets. At least we are all aware of the emergence of BRICS.
Should those countries start being more crypto-friendly, it's game over for the US.

Definitely a very good point as well that you brought up here. But let's face it, neglecting Bitcoin right now, no matter what size your economy as a country is, is probably going to be a mistake. That is why I provided this quote "Emmer added that cryptocurrencies will succeed with or without the United States." It makes so much sense because the guy is right. There is nothing to add to what he said.

Why abandon or regulate to death an industry that is definitely going to be thriving one way or another? Even if it's not Bitcoin (just theory here), crypto money and applications are a thing of the future and young people want to work in that industry. It is attractive, it is modern and has to do with all the things that are to come and enfold their full effects: artificial intelligence, automation, decentralization, supra-globalization as I would call it because Bitcoin is even operating outside the realm of the current global economic system as we got used to calling it. Since it is unlikely that even a global alliance could stop Bitcoin from operating, I would call it supra-global. Because Bitcoin does what the people of every country in the world want it to do, and not what single countries' governments want the people of the world to do. They can require people with force, but that is temporary.

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Quote from: Abiky on April 20, 2023, 09:25:39 PM

These so-called "decentralized exchanges" are a joke these days. The founders/creators of such exchanges have their identities known to the public. Not to mention that 99.9% of DEXs are built using centralized infrastructure. It's no wonder why governments can easily go after such exchanges. Uniswap had a reputation of leaving its V3 version of the protocol as "closed source" (although now that's no longer the case). You can see that developers only care about making money instead of what matters most (which is decentralization and censorship-resistance).

At least, we have a small number of DEXs that truly deliver as promised. Ultimately, the SEC will give up once it discovers that it's impossible to take down the decentralized world of crypto/Blockchain tech. Who knows if this will make the industry bigger and stronger than ever? Just my thoughts Grin

Yeah, it's always about money. For example, look at BISQ, the exchange is full decentralized and very old yet very few people want to use it. People instead rush to use fake centralized exchanges marketed as DEXs

Quote from: tiCeR on April 21, 2023, 02:49:00 PM

<...>

To add to this, I believe the US administrators are worried that they are completely losing grip as a top Financial muscle worldwide. Implementation of very stringent measures is only going to push people to use crypto even more.

Right now, we have Countries like China ready to take over and break away from the US Monopoly of the Financial markets. At least we are all aware of the emergence of BRICS.
Should those countries start being more crypto-friendly, it's game over for the US.

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They can only enforce it to the so called dex with CEO or with known team where they can send notice and regulatory requirements or sue them, then shut the site they are managing etc.
Unlike on those defi apps, dex as swaps that uses smart contracts, or unknown "DEX" team since they dont know they are talking too, SEC only way is to shut the site or its message its server hosting site for termination, but that wont just like that since making websites up is just easy.

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Quote from: Abiky on April 19, 2023, 05:32:53 AM

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Do you think the SEC has gone too far on its crypto/Blockchain crackdown? If not, why? Your input will be greatly appreciated. Thank you.

It is not surprising that SEC will be going after DEX as well. They started enforcing with CEX and in due time everyone will be following their rules if not they will be slapped with huge fines. Even if we have a truly decentralized DEX what if they start tracking and tag the coins that is being traded as tainted coins and if they start targeting them, then they will be having some sort of strategies like these.

tiCeR

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I think this fits well into the discussion because I believe that the opposition against crypto bashing is also growing. The crypto lobby isn't small and weak anymore and as we can all imagine a lot of people from congress hold crypto themselves. Or their kids. This reminds me a bit of the trouble the European Union had when they wanted to revoke a special taxation status for Cyprus and they couldn't get the majority in the European parliament mobilized for it. Why? Well, that's easy, because almost all of them had connections to Cyprus that benefitted themselves. I think we are going to see something similar over time in the crypto space not only because people are financially incentivized, but also because they do understand that there is a true for Bitcoin to exist or otherwise it wouldn't be where it is.

Republicans Pummel SEC’s Gary Gensler Over Crypto Crackdown

McHenry clashes with SEC’s Gensler over crypto crackdown

Republicans rip SEC chief for crypto lawsuits, climate rules

US congressman attacks SEC boss over crypto regulation

And let me quote the beginning from the last article:

"TL;DR Breakdown

House Majority Whip Tom Emmer criticized SEC Chairman Gary Gensler for acting in “bad faith” and obstructing the growth of the crypto industry in the U.S.
Emmer added that cryptocurrencies will succeed with or without the United States."

See, the tone became different recently.

The Sceptical Chymist

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Quote from: Abiky on April 19, 2023, 05:32:53 AM

Some have publicly-known developers, while others are hosted on centralized servers using centralized infrastructure.

Yep, and I'm confident that if the government wanted to find out information about most crypto users and what they've been doing, they could do so with enough incentive. That's why I've always thought that Satoshi is not a single man but either an organization or perhaps someone working for the government (or they've found him in secret and made a deal of some sort).

I've never used a DEX, and while the concept has always sounded interesting to me, I've remained skeptical about their decentralized nature keeping prying eyes away.

Quote from: Abiky on April 19, 2023, 05:32:53 AM

Do you think the SEC has gone too far on its crypto/Blockchain crackdown?

Definitely--but the government always goes too far when things might come down to legal issues. If things get challenged in the courts, no agency wants to have under-investigated or under-prosecuted its target. And I think the US government's attack on crypto has been way too aggressive as of late, considering that bitcoin has been around since 2009 and the main method of scamming and money laundering continues to be with fiat. They just don't want anything but the USD, you know?

Darker45

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It's funny how the SEC wants to regulate this and that when in fact it hasn't clearly defined terms yet. The chairman cannot even give an unequivocal answer whether Ethereum is a security or not. And that's in front of legislators. And yet the agency has already been doing probes, imposing fines, threatening with lawsuits despite the lack of clarity. They're even in conflict with another regulatory body. I guess before enforcement, official and detailed guidelines and specific rules and definitions should clearly be set first. How do they even define decentralized?

Abiky

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Quote from: logfiles on April 19, 2023, 03:41:39 PM

It's nothing new. The monitoring, the suing and enforcement by SEC has already been happening

Another "decentralized" exchange, dydx exiting Canada market sighting regulatory pressure - https://coingeek.com/dydx-exchange-shuts-down-operations-in-canada-over-unfavorable-regulations/

These so-called "decentralized exchanges" are a joke these days. The founders/creators of such exchanges have their identities known to the public. Not to mention that 99.9% of DEXs are built using centralized infrastructure. It's no wonder why governments can easily go after such exchanges. Uniswap had a reputation of leaving its V3 version of the protocol as "closed source" (although now that's no longer the case). You can see that developers only care about making money instead of what matters most (which is decentralization and censorship-resistance).

At least, we have a small number of DEXs that truly deliver as promised. Ultimately, the SEC will give up once it discovers that it's impossible to take down the decentralized world of crypto/Blockchain tech. Who knows if this will make the industry bigger and stronger than ever? Just my thoughts Grin

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They're too strict but are they really be able to do that if a platform is wholly decentralized and being trusted by the people? Like it's been established and has deep foundations in the community wherein the roots and owners of it can't be traced. But that's unlikely, right? They can easily look for the domain owners of them and hunt them out and have them regulated then. IMO, as long as it's not on their jurisdiction an actual dex won't have a problem being regulated by them.

Smack That Ace

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It's SEC again, they're doing everything they can to control the entire market. Recently, I also watched some notable news about the SEC chairman who participated in the US congressional hearing, and as a result many politicians are pro-crypto and disagree with the way approach of the SEC in recent times. So I think the SEC will soon fail with its plan to suppress the market. They are going too far thinking that it will be easy to control the market, but they are certainly wrong.

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It wouldn't be a surprise if the SEC would start enforcing regulations on DEXs since its main goal is to oversee all existing businesses and if possible, earn additional income from crypto. Even if the exchange were included in the DEX, that would not stop the government from monitoring and enforcing regulations that could control the DEX.

Maybe the SEC has gone too far but we also can't do anything about it, especially the crypto business owners like exchange owners and others. But well, let's hope it's not done and won't be.

hugeblack

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The happy side of this story is that it will act as a filter to see if the platform is decentralized or if it claims to be.

you can consider it as an opportunity to develop decentralized protocols, but are they really serious and have enough resources for that Shocked

?
It's a headache if these decentralized platforms decide to operate at the smart contract level, but unfortunately even some cryptocurrencies could be the next target.

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Quote from: Abiky on April 19, 2023, 05:32:53 AM

Does that mean the SEC will begin to enforce regulations on DEXs?

It's nothing new. The monitoring, the suing and enforcement by SEC has already been happening

Another "decentralized" exchange, dydx exiting Canada market sighting regulatory pressure - https://coingeek.com/dydx-exchange-shuts-down-operations-in-canada-over-unfavorable-regulations/

Quote

Most of the so-called DEXs we know and love today are not as decentralized as they claim to be.

Yes they are not decentralized

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Then I'll see how the SEC will manage to regulate those DEXes. If the decentralization they (DEXes) claim is "fake", then there is no other way but to submit to this kind of institutional orders (maybe more in the future).
However, I'm sure the developers won't stop snatching the interest of dedicated users in freedom. So we can expect that more truly decentralized platforms will emerge in the near future.

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I made this list Crypto exchanges under SEC’s Radar!, and if you've noticed, over the past three months the SEC has been active in shutting down, tracking, and sanctioning all of centralized exchanges, so it looks like it's the next turn for decentralized one.

Quote from: Abiky on April 19, 2023, 05:32:53 AM

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Does that mean the SEC will begin to enforce regulations on DEXs? Most of the so-called DEXs we know and love today are not as decentralized as they claim to be. Some have publicly-known developers, while others are hosted on centralized servers using centralized infrastructure. I fail to see how the SEC will succeed, especially when there's a small minority of DEXs that are truly-decentralized (it becomes difficult, if not impossible, to enforce regulations).

Now we will know the real centralized platforms and the platforms that claim to be decentralized, as most of these platforms depend either on a network with a certain number of signatories, or liquidity, deposit and withdrawal can be controlled.

True DEX cannot be stopped, but they can be influenced and restricted.

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Quote from: Oshosondy on April 19, 2023, 05:57:46 AM

Because they have website, regulators will later go for them and they wouldbbe regulated, this may take time to happen, but it will eventually happen in a way you will need KYC to connect to decentralized exchanges.

I'm not sure why their operation on one network makes them centralized, but as far as the website goes, I believe most of them are just a UI to make smart contract interactions easier. If they remove it, people can still interact with the contracts as long as they learn how to do so. But this will obviously deter many traders. If they want to seize the website, it is also possible that people would just deploy their forks or run the UI on IPFS or something similar. Would they also claim that should be regulated under the same law?

Quote from: Oshosondy on April 19, 2023, 05:57:46 AM

Crypto is too not regulated, it would be good for other countries to follow united States SEC. People are getting scammed, there are still companies like the FTX that needs not to be operating again.

I think a lot of people are not happy with the SEC right now. They just give a notice that claims Bittrex is violating regulations, but Bittrex claims they were never given answers when they ask the SEC about security rules, etc. It is weird that they go after Bittrex too when there are other exchanges that are clearly shadier compared to Bittrex, at least that's what people complain about on Twitter. Basically, SEC is being perceived as inconsistent and instead of trying to give clarity, they tried to make it more ambiguous. Even the chairman is caught shilling for Algo IIRC, after they claim Algo is security.

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Quote from: Abiky on April 19, 2023, 05:32:53 AM

I've read a news article from Reuters that the SEC (a US government agency) claims exisiting rules for exchanges also apply to decentralized exchanges (DEX). More details on that here: https://www.reuters.com/markets/us/us-sec-weigh-taking-more-feedback-plan-expand-exchange-definition-2023-04-14/

Those exchanges are not decentralized completely. I said they are not decentralized completely because:

they are centralized to have just one main coin with many tokens built on the blockchain of the main coin
they are websites, said to be using web 3 or so

Because they have website, regulators will later go for them and they wouldbbe regulated, this may take time to happen, but it will eventually happen in a way you will need KYC to connect to decentralized exchanges.

Quote from: Abiky on April 19, 2023, 05:32:53 AM

Do you think the SEC has gone too far on its crypto/Blockchain crackdown? If not, why? Your input will be greatly appreciated. Thank you.

Crypto is too not regulated, it would be good for other countries to follow united States SEC. People are getting scammed, there are still companies like the FTX that needs not to be operating again.

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