Does Uniswap take the first step?

In the wake of the FTX scandal, the cry for regulation just got louder. In the US, several financial regulators are already involved in the case. The heads of state of the world’s largest industrial nations also called for global regulation of the entire crypto market last week. Uniswap seems to have launched the first changes in this regard. Is this the first step in implementing the required crypto measures?

Global regulation of crypto space

The White House released a joint statement from the nations last week. The authors regard the “strengthening of regulation” and the simultaneous use of “advantages of innovation” as critical. In particular, the crypto guidelines published by the Financial Stability Board (FSB) in October are seen as the basis for global regulation.

Along with stablecoins, the G20 nations want to face the crypto ecosystem with rigorous oversight and robust regulation, the document said. The aim is to curb “potential risks to financial stability”. The decentralized financial world is probably included in this.

Users criticize Uniswap update

The largest decentralized exchange, Uniswap, explained as a result, new data protection guidelines to create transparency about the collected user data. Accordingly, the DEX collects certain on- and off-chain data associated with users’ crypto wallets. The Privacy Policy also notes that Uniswap and other “third-party services” may store data related to users’ mobile device ID, cookies, LocalStorage, operating system, device, or browser language information. The first priority is the protection of user data and privacy. Still, Uniswap wants to “make data-driven decisions” going forward.

Members of the crypto community have already expressed corresponding criticism. The privacy coin Firo team sees the privacy update as a “dangerous precedent”. Meanwhile noticed Twitter user CryptoDavid that Uniswap’s “decision did not surprise him as other DEX had also started” to curb privacy. Other Uniswap users, who see the restriction as the first reaction to the globally required regulations, apparently recognized this pattern. As a result, alternative, decentralized exchanges, including SushiSwap, were recommended.

Uniswap’s future: A double-edged sword?

With a daily trading volume of more than one billion US dollars, Uniswap is the largest (more or less) decentralized crypto exchange. It remains to be seen whether the relationship will change in the future and more users will switch to the competition due to the now dwindling privacy. However, the basic idea seems simple. Twitter user @Abelxie1 summarizes: “If a DEX collects user data, then it loses its meaning.”

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In contrast, the latest developments relating to the crypto trading venue FTX reflect the risks of a centrally controlled company. FTX was managed and ultimately ruined by almost one entity, founder Sam Bankman-Fried himself. If Uniswap were to accommodate regulation, that would mean more security for investors who rely on a more decentralized system. Institutional investors are likely to be interested, as a regulated trading venue would offer them new investment opportunities. In the future, it is precisely the first step towards regulation that could pay off.

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