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Cryptocurrencies are frequently compared to the Wild West, with regulators as the absent lawmen. But authorities are now appearing in force, and cowboys are taking note.

The latest actions against BitMEX could completely upend the crypto trading industry. Last October, cryptocurrency analyst Hasu complained that a lack of regulatory oversight allowed BitMEX to exploit its position as a market leader. “If a company submits to regulation, that means they accept punishment if they misbehave,” he wrote. “BitMEX does not do that. If they misbehave, there is only the free market to punish them for it.”

Changes to the regulatory landscape can create winners and losers, says Adam Todd, the founder and lead of crypto-derivatives platform Digitex Futures Exchange (DGTX).

Todd, a self-styled anarchist, says that his number one priority is to ensure that Digitex can operate in a sector in which KYC is now an industry standard. That’s completely unrecognizable from the industry he joined only two years ago, he says.

Regulation is “gradually suffocating us,” Todd told Crypto Briefing over the phone. Ensuring full compliance is difficult, he says, because the goalposts keep changing. The recent BitMEX scare means Digitex will now have to ramp up efforts to ensure U.S. citizens can’t access their platform when it finally goes live.

Digitex Futures aims to build the world’s first non-custodial derivatives platform. Development began in late 2017, and it will be the one of the first exchanges to integrate plasma….assuming it launches at all. The initial launch was scheduled for late April, but it was pushed-back indefinitely following issues with the initial team of developers.

Digitex will initially offer perpetual swaps that give holders – institutional or retail – exposure to Bitcoin (BTC), Ether (ETH) and Litecoin (LTC). Leverage will be as high as 100:1 on Bitcoin swaps, far above the maximum permitted by the EU’s chief financial regulator.

Digitex is domiciled in the Seychelles, the same jurisdiction as BitMEX. However, most of the company is based in Moscow, where general awareness of cryptocurrencies is far greater. Nonetheless, Todd says, their focus remains fixed on America. “If you get regulated there, you’ll get regulated everywhere,” he explained.

But regulators may not treat all crypto exchanges equally. Newer players such as Digitex have more hoops to jump through, Todd says, while “the old boys network will be just fine.” He believes that established players like derivatives platform Bakkt, supported by the owners of the New York Stock Exchange, will be waived through with few regulatory hurdles.

“It’s only going to get more restrictive,” Todd added. “Regulators are going to get more aggressive.” Following the latest BitMEX scare, Digitex is now open to moving jurisdictions, although there aren’t any current plans to do so.

But every cloud has a silver lining. Regulators are dissuading new players from coming into the industry, meaning Digitex won’t have to worry about new challengers and can take their time building the platform. “There has to be some benefit to all this shit we have to go through,” Todd added.

In early April, Todd announced his goal of taking down BitMEX, which he described as a “money-printing machine.” The exchange may still have total market dominance, but the volume of withdrawals picked up noticeably last week.

Digitex’ direct competition may be softening, but the landscape is becoming increasingly hostile. The embryonic exchange faces external pressure from established players as well as more oversight from regulators, making the space harder to operate in.

Todd and the rest of the Digitex team will continue to press ahead with development, but they might find themselves building between a rock and a hard place.