The PENGU Spot ETF is the first NFT-based crypto ETF application, as Canary Capital aims to merge NFTs and DeFi—will the SEC approve this groundbreaking move

January 2024 marked a pivotal point in the crypto industry: the US Securities and Exchange Commission (SEC) approved a bunch of 

 (ETFs) after a decade of resisting it. Later that year, several Ethereum (ETH) Spot ETFs were also approved. These early successes encouraged investment funds focused on digital assets to seek approvals for other 

 (AVAX) and other high-cap cryptos have ended up on the SEC's desk in recent months.

Until Mar 20, 2025, one thing had never occurred: an 

-based crypto ETF application. Such a move was thought to border on impossibility, given how stringently and at length the SEC evaluated ETF applications even for established fungible cryptos. And yet, the Canary Capital investment manager submitted an application to the SEC for approval of the first NFT-focused crypto ETF product, the PENGU Spot ETF, triggering a mini-revolution in the emerging space at the junction of crypto and traditional finance.

If approved, this ETF will be the first of its kind in the industry, based on a mix of 

. Many observers expect Canary Capital to struggle mightily for SEC endorsement of its revolutionary product. Nevertheless, the SEC now has a track record of approving crypto ETFs — which raises hopes for both the altcoin ETFs mentioned above and the PENGU Spot ETF application.

The PENGU Spot ETF is a proposed exchange-traded fund (ETF) product introduced by the Canary Capital investment management firm, and is currently awaiting approval by the SEC. 

 on Mar 20, 2025, making this the first crypto ETF product with an NFT component that’s vying for the approval of America's primary financial regulator. The ETF has been registered in the US state of Delaware.

The Pengu Spot ETF's portfolio is envisioned as consisting primarily of PENGU tokens that will make up anywhere between 80% and 95% of total assets held, with the rest allocated to Pudgy Penguins NFTs. Small portions of Solana's SOL coins and Ethereum's ETH tokens will also be included in order to facilitate transactions and liquidity support, as PENGU tokens are mainly issued on the Solana blockchain, and Pudgy Penguins NFTs are an Ethereum-based collection. 

Since Canary Capital will hold these assets and periodically rebalance the portfolio, gas fee payments on Solana and Ethereum will apply, with fees paid in SOL and ETH, respectively.

Launched in 2021 on Solana, the Pudgy Penguins NFT collection consists of 8,888 items, each depicting a cute penguin with a distinct combination of five different traits. In December 2024, the project introduced a related fungible cryptocurrency, the Ethereum-based PENGU token. As of Apr 2, 2025, PENGU is a smaller-cap asset, ranked 191st in the crypto market, with a total 

 of $319 million. In contrast, Pudgy Penguins are among the leading projects in the NFT space, ranked second among all NFT collections, with a market cap of $155 million.

Canary Capital's application to the SEC is unique in two ways: it’s the first ETF with an NFT component, and it marks the first time ETF approval has been sought for a relatively smaller-cap cryptocurrency, PENGU, which isn’t even among the top 100 crypto assets by market cap. All of the other crypto ETF applications approved by the SEC (or currently vying for approval) are based on high-cap, leading assets that are typically ranked within the top 30.

As of Apr 2, 2025, the SEC has had the application for the PENGU Spot ETF application for just two weeks. The regulator has up to 240 days to review such applications, although historically, the SEC has pondered over crypto ETF applications for years. Now, however, the string of Bitcoin and Ethereum Spot ETF approvals in 2024 raises hopes that newer submissions may be subject to an already established evaluation framework — and thus greenlighted much faster.

At the moment, the SEC is also considering spot ETF applications for several high-cap cryptocurrencies, including Dogecoin, Solana, Polkadot, 

 (XRP). If the regulator decides to approve the applications in batch mode — all or several at once — Canary Capital will have reason to hope that its ETF is included.

However, there's been skepticism regarding the PENGU Spot ETF application, with some analysts believing that its chances might differ from those of the larger, more established altcoin ETFs. This isn't surprising, as a PENGU Spot ETF would be a distinct product, being the first NFT-focused ETF. In addition, NFTs have more limited liquidity than fungible cryptocurrencies. 

NFTs may also be harder to valuate objectively. The prices of fungible cryptos are easily sourced from the crypto market, where supply and demand establish their value. In contrast, the limited liquidity and uniqueness of NFTs makes it much harder to price them efficiently.

Moreover, the PENGU token — which will make up most of the proposed ETF — isn't among the most traded assets in the crypto market. Because PENGU has a modest position in the crypto space (along with its origins as a 

), the SEC could view it with more skepticism than it does the leading altcoins.

Naturally, all these factors are just speculation at this point, and we’ll need to wait on the SEC’s initial comments regarding the first NFT-based ETF under their consideration in order to form a more defined view of the product's prospects for approval.

Current impact of the PENGU Spot ETF application on the crypto market

The news of the PENGU Spot ETF application has so far had no appreciable impact on the price of the PENGU token itself. On the day of the application (Mar 20, 2025), the token was trading at around $0.007. Two weeks later, it's still hovering around the same price. 

On the other hand, there's been a modest increase in the average price of Pudgy Penguins NFTs traded on the market: between March 20 and 28, the average price rose by 16% from around $16,450 to $19,120, though it has since retraced slightly to $17,490 as of Apr 2.

Given the modest price effect, investors are likely still cautious about the chances for the PENGU Spot ETF's approval.

However, if it is approved, the broader impact on the crypto market could be far-reaching, as such a step would signify the SEC's openness to both NFT-based ETFs, and ETFs made up of smaller-cap cryptocurrencies, including meme coins. The number of tokenized asset funds that offer NFT-based products would then be likely to increase significantly, facilitating mainstream NFT adoption within traditional financial markets.

An SEC approval of the PENGU Spot ETF may lead to a flurry of further ETF applications based on NFTs in some form. This could even include the first ETFs composed entirely of NFTs. Other crypto asset types — e.g., 

 (RWAs) — may also become candidates for the SEC’s consideration. Furthermore, in the unlikely event that Canary Capital’s PENGU Spot ETF were to be approved ahead of the altcoin spot ETFs currently in the SEC’s pipeline, it would send a very strong signal that those ETF applications are also a sure bet.

The current PENGU Spot ETF application is a pioneering event that may open up opportunities for NFT ETFs and other crypto ETFs based on partial NFT holdings. Although the SEC approved multiple Bitcoin Spot ETFs in early 2024, few people expected an NFT-based ETF to emerge so soon afterward. Probably even fewer expected a meme coin–based ETF to be taken seriously by the SEC. Unique in so many ways, the PENGU ETF flips the entire concept of traditional ETFs on its head.

Canary Capital's attempt to get approval for an NFT-backed ETF is truly a bold undertaking, though observers said the same thing about 

 just a few years ago. Someone needed to become a trailblazer in this area — and Canary Capital has taken up the noble role without hesitation. Now, all eyes are on the SEC as it prepares to weigh in on a product it has never before encountered.

Intermediate

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PENGU Spot ETF: A bold move for NFT investing — or just hype?

In this article, we break down what to expect from Liberation Day and how it could shape the outlook for equities, the US economy and crypto markets.

 April 2, 2025 as "Liberation Day" — a moment he claims will restore America's trade fairness through sweeping reciprocal tariffs. With few concrete details confirmed, global markets remain on edge. Investors are bracing for the economic fallout of a potential trade war, and crypto traders are watching closely to assess the impact on digital assets. In this article, we break down what to expect from “Liberation Day” and how it could shape the outlook for equities, the US economy and crypto markets.

Since returning to the White House in January 2025, President Trump has prioritized reshaping US trade policy with a renewed focus on tariffs. His administration has already announced 

 on all steel and aluminum imports. Many of these actions take effect this week, coinciding with his so-called Liberation Day.

Trump argues that tariffs are a necessary tool to reduce the US trade deficit and force foreign nations to stop what he calls "economic warfare" against the American worker. Treasury secretary Scott Bessent 

 countries with persistent trade surpluses — dubbed the 

 — as primary targets for reciprocal tariffs. These include China, the EU, Canada and Mexico.

However, critics point to the growing risk of a global trade war, with multiple partners already threatening or initiating retaliatory measures. Goldman Sachs recently 

, citing declining business confidence and mounting economic uncertainty. The tariffs, designed to protect US industries, could instead raise prices and weigh on consumer spending.

What to expect from Trump's ‘Liberation Day’ announcement

Trump is expected to reveal his tariff plans in a Rose Garden press conference on April 2. White House press secretary Karoline Leavitt 

 that the president would impose tariffs on "any country that has treated the American people unfairly" — though no nation-specific exemptions have been confirmed. Trump has promised these reciprocal tariffs will be 

While final details remain under wraps, proposals have included both country-wide and sector-specific tariffs. These could range from uniform, percentage-based levies to targeted charges on industries like pharmaceuticals, semiconductors and autos. Trump's advisers, including Trump trade adviser Peter Navarro and commerce secretary Howard Lutnick, claim the new tariffs could generate over $600 billion annually — though many economists dispute this figure.

Delayed tariffs on Canadian and Mexican imports, 

 in early March, are also set to take effect this week. These include taxes on agricultural products, energy goods and automotive components. Trump has also 

 a 25% tariff on imports from countries that purchase oil or gas from Venezuela.

Given the administration's conflicting signals in recent weeks, there's a wide range of potential outcomes. Whether “Liberation Day” ushers in immediate enforcement, additional delays or future negotiation rounds remains to be seen. For now, uncertainty reigns.

Potential impact on the US economy and global markets

Economists warn that broad-based tariffs could lead to slower US growth, higher consumer prices and widening inequality. Goldman Sachs now 

 Trump's trade policies to reduce annual GDP growth to 1.5% from 2%, while the odds of a recession are being raised from 20% to 35%.

Global equity markets have already shown signs of stress. European and Asian indices dipped ahead of “Liberation Day,” while the S&P 500 and Nasdaq-100 

 in March (respectively). Auto manufacturers, tech firms and retailers could be especially vulnerable if tariffs disrupt global supply chains.

There's also the question of the Federal Reserve's response. With inflation risks rising, policymakers may hold off on anticipated rate cuts, further complicating the economic outlook heading into Q2.

How will ‘Liberation Day’ affect the crypto industry?

Crypto markets have mirrored broader risk sentiment over the past quarter, with investors reducing exposure amid macroeconomic turbulence. As of April 1, the 

 is down 16.9% year-to-date. Bitcoin has fallen 10.48%, Ethereum 44.2% and Solana 33% — despite reaching new highs in January on hopes for pro-crypto policies from the Trump administration.

Investor optimism has since cooled as recession risks, inflation concerns and policy unpredictability drive a risk-off mood. Bitcoin dipped to $81,656 over the weekend, marking its weakest Q1 since 2018. Traders remain cautious ahead of “Liberation Day,” awaiting clarity before opening new positions.

“Liberation Day” could further weigh on crypto prices if market volatility increases and capital rotates out of risk assets. However, some analysts believe any resulting sell-off may offer an opportunity to 

 — especially if Trump follows through on crypto-friendly regulation later this year. For now, though, many eyes are on April 2.

With details still unknown, the crypto market remains in a "wait-and-see" phase. “Liberation Day” could mark a turning point — for better or worse — depending upon the scope and execution of Trump's tariff agenda.

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Trump's 'Liberation Day': What it means for crypto markets

Grayscale has filed to convert its private Digital Large Cap Fund, which includes Bitcoin, Ethereum, XRP, Solana, and Cardano, into a publicly available exchange-traded fund (ETF). 

Daily top performer — Compound Finance (COMP)

The S&P 500 rose 0.38% as investors awaited new tariffs amid weak factory data and declining job openings. Gold eased to $3,113 after hitting a record high, driven by profit-taking ahead of Trump's tariff announcement, but remains strong due to safe-haven demand and economic uncertainties. The Coindesk Indices, which tracks the broader crypto market, are up by 1.30%, with Bitcoin and Ether are up 3.10% and 5.19%, respectively, in the past 24 hours. Trade these markets and more with up to 500x leverage on Bybit MT5 using this 

Today's top performer is COMP, up 14.3%, following the proposal for the creation of a foundation to ensure consistent leadership and coordination by Compound.

Compound Finance (COMP), launched in September 2018, is a DeFi lending platform that allows users to earn interest on crypto assets. Built on smart contracts, it adjusts interest rates based on supply and demand, connecting lenders and borrowers without intermediaries. In June 2020, Compound decentralized with the launch of COMP and full governance transfer. However, it lacks a core operational pillar. With Compound v4 development and increased community engagement, the need for consistent leadership has grown. To address this, Compound Labs 

 creating a Compound Foundation for structure, clarity, and coordination, similar to other ecosystems like Uniswap.

Check out the latest prices, charts, and data of 

 to convert its private Digital Large Cap Fund, which includes Bitcoin, Ethereum, XRP, Solana, and Cardano, into a publicly available exchange-traded fund (ETF). The fund, which currently holds 79.4% Bitcoin and 10.69% Ethereum, has grown by 478.83% since its launch in 2018. The conversion would allow everyday investors to access the crypto market, covering about 75% of the digital asset market cap. If successful, it would eliminate the current barrier that restricts access to accredited investors. The filing is still in progress, with management fees and other details pending.

Yesterday, BTC spot ETF had a total outflow of $157.8 million, with GBTC seeing a loss of $10.1 million and non-GBTC products losing $147.7 million.

 that its airdrop might be approaching, with a claim page now live. Registration for the airdrop runs from April 2 to April 17, and claims are expected to open on April 22. However, nothing has been officially confirmed yet. Stay tuned for updates.

Beginner

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Grayscale files to convert digital large cap fund into publicly accessible crypto ETF

In this guide, we'll dive into how to trade crypto with the Bybit app, a convenient and feature-rich platform. Explore spot and derivatives trading for beginners on the Bybit app.

Welcome to our step-by-step guide on trading using the Bybit app. In this article, we’ll walk you through everything you need to know — from downloading the app and setting up your account to executing spot, margin and derivatives trades. Bybit is a leading cryptocurrency exchange that offers a fully localized and user-friendly mobile experience, making it easy for both beginning and seasoned traders to manage their investments seamlessly.

First, download the Bybit app from the App Store (iOS) or Google Play (Android). Once you’ve installed the app, open it and select your preferred language.

 and register using your email address or phone number. Complete the verification process by submitting your mainland Chinese ID or passport as required. This step is crucial to ensure your account is secure, and to unlock higher withdrawal limits.

After verifying your identity, head over to the 

 tab to fund your account. You can directly deposit cryptocurrencies like BTC or USDT. Our 

 (UTA) streamlines fund management, allowing you to trade seamlessly across different markets without the hassle of multiple wallets.

Spot trading with Bybit lets you buy or sell cryptocurrencies at current market prices with immediate settlement.

To begin, log in to the app and tap on the 

Choose your desired trading pair, such as BTC/USDC or ETH/USDT, from the list.

 lets you specify a price at which you want to buy or sell. 

Enter the amount you wish to trade, review the details and confirm your order.

Once your order is executed, monitor its status in the 

Bybit has an intuitive interface that displays real-time updates, so you can track your trades anytime with ease. 

How to execute a spot margin trade with the Bybit app

For traders looking to leverage their positions, Bybit offers a spot margin trading feature that allows you to borrow funds to increase your buying power. Start by logging into your account and tapping on 

Choose a trading pair, such as ETH/USDC, which supports margin trading with leverage options of up to 10x. 

Once your trading pair is selected, you’ll need to select the margin amount (e.g., 

 at which you want your limit order to execute.

You’ll also see several other important metrics, such as 

Enter the amount you wish to trade, and then carefully review all of the details.

After confirming your order, your margin trade will be executed. You can track your position in the 

 tab, where you can also set up stop-loss or take-profit orders to manage risk. 

How to trade derivatives with the Bybit app

Bybit also offers derivatives trading, which allows you to speculate on the price movements of cryptocurrencies without actually owning the underlying assets. Derivatives include Futures and Perpetual contracts, which can be traded with leverage, sometimes up to 100x.

To start, log in to your account and tap on 

Set your desired leverage (e.g., 50x) and choose between 

 margin modes, based on your risk preference.

 (if using limit or conditional orders) and 

Once you’re satisfied with your parameters, confirm your order and your position will appear in the 

Trading with the Bybit app offers numerous advantages that make managing digital assets both efficient and secure. The platform’s user-friendly design, high-speed execution and comprehensive risk management tools cater to traders of all levels. Our Unified Trading Account (UTA) streamlines fund management by consolidating assets for spot, margin and derivatives trading under one account, which reduces operational complexity and enhances overall efficiency. This streamlined approach lets you focus on strategy rather than logistics.

Additionally, Bybit’s state-of-the-art security measures — such as multi-factor authentication, regular independent audits and cold storage of assets — ensure that your transactions are conducted safely and transparently. With an interface designed to minimize distractions and provide real-time data, you can quickly monitor market movements and adjust positions. 

Our commitment to a secure and reliable trading experience is evident in our continuous improvements and proactive customer support. These features empower you to make informed trading decisions, fostering confidence in your ability to navigate the dynamic crypto market.

Bybit delivers a secure, robust and intuitive mobile platform that simplifies cryptocurrency trading for everyone. In this guide, we’ve explored how to set up an account, fund it and execute various types of trades — spot, margin and derivatives — using a fully localized and user-friendly interface. Our Unified Trading Account and comprehensive risk management tools ensure a smooth trading experience so you can focus on growing your investments.

Looking ahead, Bybit remains dedicated to innovation and excellence in the crypto industry. We continually refine our platform, based on user feedback and market trends, ensuring that you have access to the latest tools and features. Our commitment to transparency and security underpins everything we do as we build trust and empower traders. 

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How to trade with the Bybit app

DeFi

Decentralized exchanges are being touted as the 'next big thing' in the DeFi space. Read all about how they work here.

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 makes it possible to exchange assets of value on a peer-to-peer basis without relying on any centralized entity to govern the transaction. But when it comes to purchasing and exchanging crypto assets, users still tend to favor centralized platforms.

Decentralized exchanges (DEXs) are, however, gaining in popularity. Yet, just like anything else, DEXs have their pros and cons. In this article, we will talk about DEXs and compare them to their centralized alternatives. Let’s first, though, look at decentralized finance (

Traditional financial institutions imply control of a single, central source. DeFi stands for “decentralized finance,” a collective term for various financial applications, products and services that don’t need intermediaries like banks, credit units or insurance funds. 

While all these intermediaries were indeed useful in the past, helping different parties conduct deals and providing the security of their funds, the traditional systems of finance have lost the trust of the public over time — for various reasons. 

DeFi systems, on the contrary, do not need the superstructure of third parties because they are automated and run on the blockchain. Thanks to 

, it’s become possible to set up agreements that are fulfilled automatically. This means cheaper transfers, low-cost transactions and investments, and more efficient access to the funds for all participants. 

, as the whole crypto ecosystem would not be possible without decentralized means of payment. With the growth of interest in the field, the number of tradable coins and tokens increases as well, having started with 

Not every project can handle the fees imposed by centralized exchanges to provide their users with easy access to their native tokens. As a result, the demand for decentralized exchanges has grown as well.

Decentralized exchanges (or DEXs) are cryptocurrency exchanges that don’t require the services of third parties for operations with crypto assets. Thus, they allow traders to conduct deals directly with each other. Their functions are similar to those of traditional centralized platforms, but in contrast to them, DEXs provide a direct peer-to-peer trading mechanism based on smart contract execution.

Such a type of trading presupposes that all the participants in the deal keep control over their digital assets and private keys, with no necessity to pass them to any intermediary or custodian. In other words, DEXs function as platforms for users to search for matches on their buy and sell orders, without a central authority responsible for asset storage and swapping.

As the idea of creating such platforms was put to practice in 2013–2014, it isn’t easy to define which platform became the pioneer in this field, since different resources give different names. 

Today, numerous decentralized exchanges with different functions can be easily found on the web. GitHub alone lists over 250 fully operational DEXs at the time of writing. The most popular examples include 

, Compound, Curve Finance, 1inch Exchange and PancakeSwap.

It’s worth mentioning, though, that in reality, many online exchanges calling themselves decentralized are not absolutely decentralized. They use their own servers to store the trading data, though they don’t have access to users’ private keys.

DEXs perform similarly to their centralized counterparts in some ways but are different in others. There are several types of DEXs available to users, but the main feature that is common to all of them is that orders are executed on-chain. Some DEXs offer cross-chain token sales (e.g., AnySwap), but usually they are focused on a single blockchain (e.g., 

 or Binance Chain). There can be three differentiated basic categories of DEXs: on-chain order books, off-chain order books, and automated market makers. 

 implies that each order and each transaction is recorded on the blockchain. This requires lots of network nodes and hence seems rather impractical, as operations often cannot be performed in real time.

As for off-chain order books, such DEXs cannot be called entirely decentralized as records of transactions are carried out of blockchain, which may require the third party to be involved. Some specialists call such exchanges hybrid, since they combine the functions of centralized and decentralized exchanges.

These are protocols that provide liquidity to specific markets through automated algorithmic trading. This model doesn’t require any order book.

In fact, most DEX servers still host order books, but they don’t keep private keys. 

The purposes of decentralized and centralized exchanges are the same: they give access to high-quality financial tools and services for any person who requires them (and has a connection to the internet). The main difference between them is in the form of management.

The centralized exchanges are managed by a definite organization or individual who is responsible for the protection of the users’ personal data and funds. These entities have absolute control over the exchange and make decisions on the exchange’s functions and development themselves.

The decentralized platforms are managed in an automated manner, and their participants are often involved in the process of decision-making. These exchanges provide the technical possibility for the direct interaction of the participants and voting for or against important proposals.

Currently, a centralized model is dominant. As has already been mentioned above, the number of decentralized exchanges is over 250, while the number of their centralized counterparts exceeds several thousand. 

 reports that by the end of 2020, only 19% of all trading platforms are decentralized, while trading volumes provided by these platforms make up around 1%. DEXs are still in the early development stage, but they undoubtedly implement an innovative concept that is demanded by cryptocurrency markets.

No doubt, DEXs have been a breath of fresh air to the world of online exchanges, but they have both advantages and disadvantages. 

Most of such platforms’ strong points result from their distributed architecture and the absence of a single management center. Here are some of the key advantages that they provide:

Decentralized exchanges provide complete anonymity for their users. In the majority of cases, they don’t require any form of sign-up process. That is why no personal data is collected. Investors don’t have to pass KYC and AML compliance procedures or other identity checks. 

There are some legal requirements that cannot be neglected by central authorities, but they don’t work in the case of a truly decentralized platform. Of course, the legislative system will adapt to this kind of exchange with time, but now, thanks to DEXs, it is possible to trade in a completely anonymous manner.

Perhaps the biggest problem with centralized exchanges is the risk of being hacked, as the central storage of users’ funds turns into a honeypot for any attacker that manages to get through. The news about hacking attacks on popular platforms shows up in the media regularly, despite all the security measures put in place.

This results from the custodial nature of centralized exchanges, which means that they hold their investors’ assets themselves. Decentralized exchanges, on the other hand, are noncustodial. They allow users to integrate directly with their wallets. There is no single access point to all the assets and users’ data. This makes hacking more difficult and less profitable because an attacker would have to break into every individual account, instead of stealing from a central hub.

DEXs have no access to users’ funds, which not only lowers the risks of hacking attacks, but also lessens interference from the third parties, either from the management of the exchange or the local authorities. The funds will not be frozen, the withdrawals will not be delayed or denied, and the exchange will not be blocked by legislative authorities.

The absence of third parties makes the transactions much cheaper, compared to their centralized counterparts. While centralized exchanges usually impose taker and maker fees, with DEXs users only have to pay a network fee.

Thus, decentralized exchanges provide users with a much cheaper and safer solution, compared to their centralized alternatives. However, there is another side of the coin as well (so to speak). What about the downsides?

The same peculiarities of the decentralized exchanges’ architecture and full users’ control that result in the advantages mentioned above lead to a number of disadvantages and problems.

Many trading options such as stop losses, margin trading, technical analysis tools and lending are not available on the most decentralized exchanges. To begin trading, it is necessary to become familiar with browser extensions and smart contracts — and the interfaces are often not user-friendly. Decentralized platforms rarely support fiat currencies, and the process of depositing funds may turn out to be rather confusing and complicated.

Decentralized exchanges struggle with liquidity. They support diverse trading pairs, while the number of users is much lower. Their liquidity mainly depends on the number of participants actively trading on the platform, which makes things more complicated since centralized exchanges remain more popular these days.

The distribution of blockchain nodes means low throughput. Centralized platforms demonstrate higher indices because they have centralized servers. That is why the average order execution of centralized cryptocurrency exchanges is much faster. Slower performance on DEXs may lead to so-called “price slippage” when a transaction cannot be executed, due to changes in the prices of the cryptocurrencies that are swapped.

DEXs don’t have customer support that is able to influence the transactions or the users’ accounts. If anything goes amiss, users will have nob one to assist them.

Despite these obstacles, DEXs are still much more reliable and safer when compared to centralized platforms. Moreover, they are a much better fit for experienced users who understand the risks and are ready to take responsibility for their activities there.

The rapid growth of decentralized exchanges has turned out to be a challenge for market regulators, and has raised new legal issues. The status of DEXs is ambiguous because some of their features, like anonymity, contradict some requirements of  applicable legislation.

Different countries try to solve this problem in different ways. The US makes efforts to apply the existing legal basis, while the authorities of Singapore strive to create a new regulatory system for such exchanges. Nonetheless, there is no unequivocal position on DEXs in these countries, while  still others don’t regulate such platforms at all.

One of the main difficulties connected with the regulation of decentralized exchanges is that in most cases, they are not controlled by a definite legal entity or person. This leads to problems with the definition of a responsible person if violations are found. There can be considerable difficulties with regard to the regulation, per se, of trading activities. That is why it is impossible to apply measures and rules to them that are applicable to centralized exchanges.

DEXs resolve most of the issues that centralized platforms struggle with, as they provide users with a much more secure solution to exchange their funds. The recent introduction of Uniswap technology has made it possible to quickly switch ERC-20 tokens, and has pushed the use of decentralized exchanges to new heights.

However, their popularity is still way lower while the legalization questions remain unsolved. DEXs definitely have lots of potential, but they still have a long way to go before they go mainstream.

What Are Decentralized Exchanges (DEXs) and How Do They Work?

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