Will governments crack down on DEXs someday?

[madawg]

If something is actually really decentralized then how is it possible for a government to crack down on it unless it actually was not really decentralized in the first place?

[Abiky]

The most likely action that government will take is to tighten regulations regarding exchanges registered and allowed to operate in the country. Like in my country, all exchanges must be registered with the authorized institution there. They all need to have permits to be accepted and easily accessible.

However, DEXs are different. This will depend on the platform. However, because they are decentralized, I'm not sure the government will be able to control them, let alone crack them down. However, making transactions through DEXs more difficult is a possibility. This will likely be related to regional regulations in each country. But for global matters, this doesn't matter.

"Making transactions through DEXs more difficult"? How? The only way to do this would be controlling the on/off ramps between crypto and Fiat. But crypto to crypto transactions only? Good luck with that. A true decentralized exchange would be impossible to control. It's even worse if privacy coin transactions are involved. This will be just like the underground economy. To this date, governments have been unable to stop it. Money keeps flowing around as usual.

The problem with DEXs is that not many of them are decentralized as they claim to be. Which makes it easier for governments to get what they want. Hopefully, the few truly-decentralized ones we have left don't get compromised in the long run. Let's support developers working on such projects whenever we can.

[Doll2233]

I do not know if government has a plan to crack down decentralised exchanges in the future. Government always like to control anything they see as challenge or problem, and since people that built decentralized exchanges are public known that even make it easier for government to control decentralized exchanges. So if government wakes up one day and say decentralized exchanges are their problem, they can force decentralized exchanges to start accepting KYC which will give them to control they want.

No one can give a perfect reply about this. Can governments crack down on DEXs? Because usually governments work for their own interests; they never think about people or anything else, especially in developing countries where corruption is at its worst. They always bring sudden changes in regulations and start their own new businesses because they feel they are doing the right things, even if it never has anything positive for common people.
I read enough about a few things; just because of this, I am feeling anything is possible. They can take control of these Dexs because they are well aware of how to control them and stop people from having good things for themselves. Currently it's looking like it's not happening in the near future, but it can happen. Never write this off because it's also good for them.

[Jostle]

It's theoretically possible to issue regulations to crack down DEXes, but practically unenforceable. It would one of the those laws (if ever) that is just pure "for show".

For every DEX the regulator "forcefully" shut down through blocking IPs, etc, there would be more coming up.

So in my view, no, DEXes will stay as they are. However, DEXes (DeFi) are extremely high-risks, so it's not something I would interact with, often.

[gwestcot]

I do not know if government has a plan to crack down decentralised exchanges in the future. Government always like to control anything they see as challenge or problem, and since people that built decentralized exchanges are public known that even make it easier for government to control decentralized exchanges. So if government wakes up one day and say decentralized exchanges are their problem, they can force decentralized exchanges to start accepting KYC which will give them to control they want.

No one can give a perfect reply about this. Can governments crack down on DEXs? Because usually governments work for their own interests; they never think about people or anything else, especially in developing countries where corruption is at its worst. They always bring sudden changes in regulations and start their own new businesses because they feel they are doing the right things, even if it never has anything positive for common people.
I read enough about a few things; just because of this, I am feeling anything is possible. They can take control of these Dexs because they are well aware of how to control them and stop people from having good things for themselves. Currently it's looking like it's not happening in the near future, but it can happen. Never write this off because it's also good for them.

I mean, they can jail developers, but they won't be able to do much with the actual DEX's themselves.

[Peanutswar]

With stricter regulations in the crypto industry, it's possible governments will begin cracking down on DEXs (Decentralized Exchanges). Especially those that are truly-decentralized without KYC checks. Regulators messed up crypto mixing services, and now they'll want to put DEXs in-check. All to force people to go through KYC and lose their privacy and freedom.
[...]

Only the regulation of a government can do about crypto is just ban the crypto itself to their country or even limit these DEX to operate through using of ISP filtering with their domains. We know that most of the DEX does not have a KYC unlike with the CEX and they can't mark down all of the users if ever they wanted. Now possible here a government will push through their community to use a local exchange that they can manipulate and regulate, likewise they did here in the Philippines, they banned all of the unlicensed exchange just to dominate the local market of crypto.

[gwestcot]

With stricter regulations in the crypto industry, it's possible governments will begin cracking down on DEXs (Decentralized Exchanges). Especially those that are truly-decentralized without KYC checks. Regulators messed up crypto mixing services, and now they'll want to put DEXs in-check. All to force people to go through KYC and lose their privacy and freedom.
[...]

Only the regulation of a government can do about crypto is just ban the crypto itself to their country or even limit these DEX to operate through using of ISP filtering with their domains. We know that most of the DEX does not have a KYC unlike with the CEX and they can't mark down all of the users if ever they wanted. Now possible here a government will push through their community to use a local exchange that they can manipulate and regulate, likewise they did here in the Philippines, they banned all of the unlicensed exchange just to dominate the local market of crypto.

Ya, the Philippines is like that in every single industry. No offense, but I feel like it's one of the worst places in the world to be in crypto. You almost have to get outside of the country or hope VPN's work to be able to trade anywhere at all that has good volume and a trustworthy reputation.  

[madawg]

I just love how all these decentralized exchanges continue to use centralized domain name providers. It reminds me of those one of a kind custom high end watches .....with quartz movement.

[EarnOnVictor]

With stricter regulations in the crypto industry, it's possible governments will begin cracking down on DEXs (Decentralized Exchanges). Especially those that are truly-decentralized without KYC checks. Regulators messed up crypto mixing services, and now they'll want to put DEXs in-check. All to force people to go through KYC and lose their privacy and freedom.

There is a possibility for that, but it ain't happening, and if it happens, it can never be total. There is a limit to what the government can do in the case of a true decentralization, but when it comes to DEX, yes, they can reach them because humans are behind it; not spirits, and it's a matter of time for the government to get to them. Also, there are possibilities here; the DEX could be weakened instead, and if they are closed source, you might think you are dealing with DEX, but enough of your data are being recorded/transferred.

[bangjoe]

With stricter regulations in the crypto industry, it's possible governments will begin cracking down on DEXs (Decentralized Exchanges). Especially those that are truly-decentralized without KYC checks. Regulators messed up crypto mixing services, and now they'll want to put DEXs in-check. All to force people to go through KYC and lose their privacy and freedom.

There is a possibility for that, but it ain't happening, and if it happens, it can never be total. There is a limit to what the government can do in the case of a true decentralization, but when it comes to DEX, yes, they can reach them because humans are behind it; not spirits, and it's a matter of time for the government to get to them. Also, there are possibilities here; the DEX could be weakened instead, and if they are closed source, you might think you are dealing with DEX, but enough of your data are being recorded/transferred.

I also see the possibility that, especially when Trump says he will bring Hyperliquid to the US, for me personally it becomes quite a hard question about this DEX, and maybe others will follow as regulations will be made for the fulfillment of Business Administration in providing services, the government will entangle decentralization into centralization, we just hope that DEX developers are not tempted or even obey something that limits them with government rules that relatively attract them to enter a container that can be controlled.