OKX, a cryptocurrency exchange, internally developed a decentralized platform for perpetual contract trading, similar to platforms like Hyperliquid and Aster. However, its founder revealed they decided not to launch it due to worries about regulatory compliance.
Star Xu, the founder and CEO of OKX, mentioned in a social media post on Sunday that the Web3 division of OKX completed the development of the unnamed platform back in 2023.
Xu noted, “Hyperliquid demonstrated that significant success in decentralized perpetuals can be achieved with a lean team. Now, more rivals like Aster are entering this arena.”
“OKX Web3 has been testing a comparable product since 2023, but concerns about regulatory issues led to our decision to postpone the mainnet launch.”
Decentralized Perpetual Exchanges Experience Growth
Hyperliquid, a decentralized exchange facilitating perpetual trading, began operations in 2024 and has risen to prominence as a top platform within the decentralized finance (DeFi) sector. July marked its strongest month yet, achieving around $319 billion in transaction volume.
ASTER, which was initiated as Aster Chain in July, is another crypto derivatives exchange. Supported by YZi Labs, an organization connected to Changpeng Zhao (CZ), it positions itself as a direct competitor to Hyperliquid. DefiLlama indicates that ASTER has recorded over $22 billion in trading volume in the past 30 days.
Regulatory Issues Halted Launch
Xu did not go into specific details about the product’s stage of development. He indicated that the enforcement action taken by the Commodity Futures Trading Commission (CFTC) against Deridex in September 2023 was a significant factor in their decision.
During the 2023 action, the CFTC claimed Deridex was illegally offering trading in digital asset derivatives and failed to register as either a swap execution facility or a futures commission merchant. Their perpetual swaps were specifically targeted.
Opyn and ZeroEx, two other protocols, were also referenced in the enforcement action for allegedly providing unauthorized leveraged and margined retail commodity transactions using digital assets.
“As we celebrate the expansion of onchain perpetuals, we need to remember the CFTC’s enforcement action against Deridex in 2023. Regulatory oversight has changed substantially, and hopefully, the industry will soon receive much-needed clarity,” stated Xu.
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Evolving Regulatory Landscape
Since the election of Donald Trump as US President in January, who is perceived to be pro-crypto, there has been a notable shift in the regulatory environment in the United States.
On Saturday, the CFTC announced appointments to its Global Markets Advisory Committee and various subcommittees, which included several leaders from the cryptocurrency sector joining the Digital Asset Markets Subcommittee.
Additionally, a White House report on cryptocurrency policy released in July suggested a shared regulatory approach for digital assets between the CFTC and the Securities and Exchange Commission (SEC). The report also mentioned that the CFTC should have authority over spot crypto markets.
Magazine: Uncertainty remains as the SEC shifts its stance on crypto