The decentralized exchange dYdX has announced its plans to restructure operations by setting up a legal entity in the Cayman Islands. This legislation coincides with the rising regulatory scrutiny by U.S. authorities towards DeFi protocols.
Community-Backed Restructuring Plan
The move to transfer some of the dYdX operations to the Cayman Islands was approved through a community referendum where more than 90% of the participants voted in favor. This reorganization involves the transformation of dYdX Operation Trust (DOT) into a new organization, the dYdX Foundation, domiciled in the Cayman Islands.
This initiative shows the community’s proactive stance to embracing the more complicated and certainly the most developing regulatory environment of cryptocurrencies and DeFi platforms.
Cayman Islands: A Crypto-Friendly Destination
The Cayman Islands is famous for its permissive approach towards digital assets and business based on blockchain. The lenient regulatory environment of this British territory has been a perfect haven for crypto companies fleeing strict regulation elsewhere.
When established, foundation companies in the Cayman Islands become separate legal entities and further protect the personal finances of those who run these organizations.
dYdX’s Response to Regulatory Pressure
The move by dYdX can be seen as a response to the growing pressure from U.S. regulators on DeFi entities. Although dYdX doesn’t exactly have a U.S. presence, the global nature of the U.S. regulations has been a source of worry for many in the crypto realm. This reorganization is a preventive approach to protect both the dYdX community and the contributors from possible legal disputes.
The decentralized finance sector has lately been one of the sectors focused on by regulatory bodies, especially in the United States. However, in recent history, platforms such as SushiSwap have been subpoenaed by the U.S. Securities and Exchange Commission (SEC). Another example included is ShapeShift, which settled under U.S. securities regulators. These incidents have highlighted the difficult situation that DeFi projects may face when dealing with regulation, especially in jurisdictions with tough control, such as the U.S.
dYdX’s Proactive Approach
The decision of dYdX to reposition is not only a response but also a prevention measure that assures the continuity and sustainability of its operations. Going to a jurisdiction that is more crypto-friendly, dYdX is hoping to keep development and innovation in the DeFi sector despite the prospect of tough regulations. This action might create a precedent for other DeFi projects that are confronted with the same regulatory problems.
Concurrently, the DYDX price has been in a bearish phase in the last 24 hours, with the price swaying between an intra-day high and low of $3.15 and $3.45, respectively. At press time, the dydx price was trading at $3.23, a 5.25% decline from the intra-day high.
Read Also: Sam Bankman-Fried Haunted by FTX Collapse, Emails Reveal
The post Decentralized Exchange dYdX Relocates to Avoid US Regulators appeared first on CoinGape.
Earn more PRC tokens by sharing this post. Copy and paste the URL below and share to friends, when they click and visit Parrot Coin website you earn: https://parrotcoin.net0
PRC Comment Policy
Your comments MUST BE constructive with vivid and clear suggestion relating to the post.
Your comments MUST NOT be less than 5 words.
Do NOT in any way copy/duplicate or transmit another members comment and paste to earn. Members who indulge themselves copying and duplicating comments, their earnings would be wiped out totally as a warning and Account deactivated if the user continue the act.
Parrot Coin does not pay for exclamatory comments Such as hahaha, nice one, wow, congrats, lmao, lol, etc are strictly forbidden and disallowed. Kindly adhere to this rule.
Constructive REPLY to comments is allowed