> And to me, at least, it's pretty clear why competent, responsible developers are not participating in this space -- we're too frightened by possible governmen

> And to me, at least, it's pretty clear why competent, responsible developers are not participating in this space -- we're too frightened by possible government sanctions. I don't think that's clear at all. In fact I think bunderbunder has it right. Those who make the best products will require a large enough expense for formal design, implementation, secure hardware acquisition, physical security (i.e. no simply running your exchange on someone else's cloud without a lot of oversight), the works. This requires tons of time and resource investment. Because if any part of that chain is improperly coded, designed, implemented, etc. it will eventually be exploited and you'll be no better than the Poloniex type exchanges of the world. In the meantime there will be those "incompetent" developers you mention with a shipping product already on the market. And theirs will be much cheaper as they don't need to devote "Space Shuttle computer software" levels of development design and implementation effort. So you'll be both late to market and more expensive. If you're talking about financial security here then you effectively need to be building a Bentley instead of a Pinto. But you'll be competing in that unregulated market with Pintos with a consumer base full of people willing to take the risk of driving in a Pinto instead of a Bentley they can't afford anyways. And this has nothing to do with the government yet, either sanctions or regulations. In fact this type of "tragedy of the commons" is exactly why there is government regulation. They help ameliorate the inevitable "race to the bottom" by artificially limiting where the bottom may be. But government regulation probably won't help too much here since you can always run your exchange out of a country that doesn't care and people can make their transactions with whatever identity they wish. Who knows, maybe the industry will self-create and self-adopt appropriate regulation as a market differentiator. But that still would open the question of who does the enforcement; if competitors discover their competition isn't actually following the regs then they'd be forced to "streamline" themselves and then the whole thing goes to pot again.