The Bermuda Monetary Authority has licensed a decentralized derivatives exchange, making DerivaDEX the first DAO-governed venue to clear a path for institutional crypto derivatives.
Summary
What did the Bermuda Monetary Authority approve?
On Nov. 13, 2025 in Hamilton, Bermuda, the Bermuda Monetary Authority granted a Digital Asset Business License to DerivaDEX. It is the first time a DAO-governed, non-custodial crypto derivatives venue has secured formal regulatory approval. Moreover, the decision establishes a playbook other jurisdictions may study.
“The future of digital finance depends on establishing a strong foundation of compliance, regulation and customer protections in decentralized markets,” said the Honourable E. David Burt, JP, MP, Premier of Bermuda. “Bermuda is committed to supporting decentralized financial institutions that share these same principles. DerivaDEX’s license demonstrates this support and also showcases our regulator, The Bermuda Monetary Authority’s sophistication in digital assets and ability to regulate innovative financial products.”
Who is behind DerivaDEX and how is it governed?
DerivaDEX was founded by veterans from DRW and Consensys and is backed by Polychain Capital, Dragonfly Capital Partners, Electric Capital, and CMS Holdings. The team’s institutional focus shaped a design that blends high-speed trading with transparent, DAO-based governance. However, users retain self-custody at all times.
In the wake of high-profile exchange failures, the platform targets risks tied to centralized custody. It maintains full asset custody for users while meeting BMA oversight requirements. That said, the model aims to improve market transparency and integrity by eliminating single-entity control.
How big is institutional demand for crypto derivatives?
Daily crypto-derivatives volumes on major exchanges frequently exceed US $50–100 billion. Binance futures volume in July 2025 surpassed US $2.5 trillion, underscoring scale. Moreover, decentralized venues are growing fast.
Hyperliquid has averaged US $6.4 billion in daily trading over the past three months, according to Blockworks Research analysis of Hyperliquid volumes. With BMA approval, DerivaDEX offers institutions a licensed route to trade under recognized oversight, addressing long-standing risk and custodial constraints.
How does a decentralized derivatives exchange fit under BMA rules?
Bermuda’s Digital Asset Business regime is a recognized benchmark for clarity. Moreover, the Digital Asset Business Act 2018 framework has attracted global exchanges and custodians seeking legitimacy. Coinbase, for instance, selected Bermuda as its first offshore jurisdiction before expanding globally.
DerivaDEX aligns non-custodial trading with licensed oversight. It lets institutions trade within a transparent governance framework while retaining control of assets. However, it also enforces regulatory obligations and risk controls the BMA expects from supervised digital asset businesses.
What performance and products will DerivaDEX launch with?
Built on a Trusted Execution Environment (TEE), DerivaDEX encrypts orders until execution to mitigate MEV and information leakage. The exchange targets sub-five millisecond acknowledgments, plus one-minute deposits and ten-minute withdrawals. Moreover, speeds aim to rival centralized venues.
The platform plans to debut with Bitcoin and Ethereum perpetual contracts for verified institutional traders. Future expansion may include tokenized equity derivatives and prediction markets, subject to additional approvals. That said, the company is exploring broader jurisdictional access.
Why a DAO model helps align risk and oversight
Unlike centralized venues where fees accrue to a single operator, DerivaDEX uses DAO-based governance to meet licensed oversight requirements. Moreover, token holders, including institutional participants, can manage risk reserves, treasury, and product development under appropriate standards.
The approach also addresses broader DAO ecosystem worries about regulatory risk that left many token holders reluctant to vote. However, DerivaDEX’s licensed operating model seeks to restore confidence in on-chain governance for institutional crypto derivatives.
What industry leaders are saying
“This license removes the final barrier preventing institutions from participating in decentralized derivatives markets,” said Aditya Palepu, CEO of DEX Labs. “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.”
“Bermuda has taken a pragmatic approach to regulating digital asset markets,” Palepu added. “This license demonstrates that decentralized exchanges can operate within established regulatory frameworks while maintaining the transparency and risk controls institutions require.”
Kendaree Burgess, Managing Director, Bermuda Business Development Agency (BDA), 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.”
What comes next for access and expansion?
The BMA’s regime continues to attract firms seeking clear rules and international recognition. Moreover, DerivaDEX will open initially to verified institutions while pursuing approvals for product additions and multi-jurisdiction access. However, its roadmap remains conditioned on ongoing regulatory reviews.
In sum, Bermuda’s approval creates a regulated path for non-custodial market structure and institutional adoption. If successful, it could reset expectations for how a decentralized derivatives exchange operates at scale within a trusted legal framework.
