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CryptoBridge shuts down as other DEXs battle with regulations


09 Dec 2019

This week, CryptoBridge announced that it was closing down, citing increased regulations and unfavorable market conditions as its reasons.  In a similar development, Waves has shut down its crypto service to resume operation as a hybrid exchange.

While CryptoBridge was a complete shutdown, Waves is merely suspending its services to prepare for its re-launch. WAVES is trying to bring all its resources together to offer a more concentrated service.

CryptoBridge was launched in 2017 as a platform that provides a scalable blockchain known as BitShares. The platform enables traders to trade new and established cryptocurrencies.  The company had been having regulatory issues for some time now. As it’s shutting down, it has given traders two weeks to withdraw their funds before finalizing its closure permanently

More decentralized exchanges (DEXs) feeling the heat


DEXs exchanges account for a majority of the trading volumes in the cryptocurrency market. Centralized platforms such as Bittrex, Kraken, and Coinbase, play the role of intermediaries. They connect people that want to trade cryptocurrency while holding their private keys and assets on company-owned wallets.

But DEXs are not necessarily centralized exchanges because of the freedom they grant users to carry transactions independently on their platform.

They offer their users the chance to retain their private keys and funds through their platform.  They offer peer-to-peer services, which provide transactions directly on their platform between two parties.

DEXs do not rely on the server to operate. Rather, they depend on a smart contract, which is more secure. This is one of the benefits of trading with DEXs over centralized exchanges. Also, DEXs operate mostly on anonymity, which is what some traders are looking for.

Nevertheless, the recent regulatory clampdown may pose a huge problem for these exchanges. Since they control a massive 99% of the cryptocurrency market, it could have a big impact if some of them are not able to operate.

Compliance within the industry is something that has been around for a long time. The strict guidance did not begin recently. While some exchanges have been able to stay within the strict regulatory terms, others have found it more difficult. That’s why exchanges like Huobi and Binance have established decentralized marketplaces with their brand with the same compliance principles.

According to the managing partner at Kelman PLLC, Zachary Kelman, the DEX exchange legal requirements, is causing a lot of confusion. He pointed out that some DEXs fail to see their organization as a complex computer interrelated structure.

Instead, the founders are treating it like a publicly identifiable brand without setting up other aspects of the organization in place. According to him, that’s the reason why many fail to meet up with the legal scrutiny within the industry.

He explained that a well organized DEX is more of a computer code rather than a group of people, a foundation, or even a corporate entity.

Author: Ali Raza for Crypto-Rating.com

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