Is Uniswap taking the first step?

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

Global Regulation of Cryptospace

The White House released a joint statement from the nations last week. The authors consider 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 foundation of global regulation.

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

Users criticize Uniswap update

The largest decentralized exchange, Uniswap, subsequently declared new data protection guidelines to create transparency about the collected user data. Therefore, 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 similar criticism. The Privacy Coin Firo Team looking the privacy update as a “dangerous precedent”. In the meantime noticed Twitter user CryptoDavid that Uniswap’s “decision did not surprise him as other DEX had also started” to limit privacy. Other Uniswap users, who see the restriction as the first response to the globally mandated rules, apparently recognized this pattern. As a result, alternative, decentralized exchanges, including SushiSwap, were advocated.

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 sums it up: “If a DEX collects user data, it loses its meaning.”

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In contrast, recent developments regarding crypto trading platform FTX reflect the risks of a centrally controlled company. FTX was controlled and ultimately destroyed by almost one entity, the founder Sam Bankman-Fried himself. If Uniswap were to accommodate regulation, it 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 can pay off.

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