Bermuda Grants First Regulatory Licence to DAO-Governed Derivatives Exchange

The Bermuda Monetary Authority has granted a digital asset business licence to DerivaDEX, marking the first time a DAO-governed decentralised derivatives exchange has received formal regulatory approval. The authorisation establishes a precedent for non-custodial trading infrastructure, potentially enabling banks, hedge funds, and asset managers to access crypto derivatives within a recognised legal framework.

The Honourable E. David Burt, JP, MP, premier of Bermuda, said:

"The future of digital finance depends on establishing a strong foundation of compliance, regulation and customer protections in decentralised markets. Bermuda is committed to supporting decentralised financial institutions that share these same principles. DerivaDEX's licence demonstrates this support and also showcases our regulator, The Bermuda Monetary Authority's sophistication in digital assets and ability to regulate innovative financial products."

The Honourable E. David Burt, JP, MP,
Premier of Bermuda

DerivaDEX was founded by former staff from DRW and Consensys, and is backed by investors including Polychain Capital, Dragonfly Capital Partners, Electric Capital, and CMS Holdings. The platform combines high-speed trading performance with a transparent governance structure, shaped by the founding team's institutional and regulatory experience.

Following exchange failures that highlighted risks associated with centralised custody, DerivaDEX represents a regulated, non-custodial trading model designed to eliminate single-entity control whilst improving market transparency. The platform allows users to maintain full custody of assets whilst meeting regulatory obligations under BMA oversight, bridging traditional market structure with decentralised finance.

Aditya Palepu, chief executive of DEX Labs, said:

"This licence removes the final barrier preventing institutions from participating in decentralised derivatives markets. For the first time, they can trade with regulatory confidence, retain control of their assets, and operate within a governance framework that's fully transparent and ensures market integrity."

Daily crypto-derivatives volumes on major exchanges frequently exceed $50 billion to $100 billion, with Binance alone recording over $2.5 trillion in July 2025. Decentralised venues are also expanding, with Hyperliquid averaging $6.4 billion in daily trading over the past three months. With BMA approval, DerivaDEX becomes the first exchange of its type to offer institutions a licensed pathway to trade under recognised regulatory oversight, addressing risk management and custodial concerns that have kept traditional financial participants on the sidelines.

Built on a Trusted Execution Environment architecture, DerivaDEX encrypts orders until execution, protecting participants against MEV exploitation and information leakage. The exchange achieves sub-five millisecond acknowledgement times, comparable to centralised exchanges, alongside one-minute deposits and ten-minute withdrawals, meeting institutional expectations for speed and efficiency.

Unlike centralised venues where trading fees flow to a single operator, DerivaDEX operates under a DAO-based governance framework designed to meet licensed oversight requirements. This structure enables token holders, including institutional participants, to manage platform risk reserves, treasury, and product development in accordance with regulatory standards. The approach addresses concerns within the broader DAO ecosystem related to regulatory risk, which have made many governance token holders reluctant to vote.

The BMA's digital asset business regime has become a recognised benchmark for regulatory clarity, attracting major exchanges and custodians seeking international legitimacy. Coinbase selected Bermuda as its first offshore jurisdiction before expanding globally.

Aditya Palepu, chief executive of DEX Labs, added:

"Bermuda has taken a pragmatic approach to regulating digital asset markets. This licence demonstrates that decentralised exchanges can operate within established regulatory frameworks whilst maintaining the transparency and risk controls institutions require."

Kendaree Burgess, managing director of Bermuda Business Development Agency, said:

"The BMA's approval of DerivaDEX demonstrates what's possible when thoughtful regulation meets technological advancement — proving that we can balance progress with accountability and create the frameworks the future of finance will rely on. It also highlights the power of advocacy and collaboration within Bermuda's ecosystem, and our commitment to amplifying these milestones to enable continued innovation and sustainable growth across the industry."

Kendaree Burgess, Managing Director,
Bermuda Business Development Agency

DerivaDEX plans to launch its platform with Bitcoin and Ethereum perpetual contracts, initially available to verified institutional traders. Future product expansion, including tokenised equity derivatives and prediction markets, is subject to additional regulatory approvals. The company is pursuing opportunities to broaden access across jurisdictions.

Found this interesting? Become a member of LiquidityFinder and get daily industry news direct to your inbox — join here.