IDEX has announced on Twitter that from today, Thursday 25th October 2018 at 6pm UTC, it will stop offering trading services to customers with IP addresses originating from New York.

IDEX’s terms of service which was last updated on 20th September reveals that, users in Washington state and North Korea will also be prevented from trading on the exchange. The service agreement reads: “Any user that is found to be using the Service from one of the aforementioned jurisdictions will lose access to their account, their funds will be frozen until the direct withdrawal function activates and the user can interact with the IDEX contract directly to withdraw their assets.”

Presumably, with the aid of a VPN, New York traders and other prohibited regions will still be able to make use of the platform. This VPN will be used to mask their actual locations, though we are not sure if Ethereum addresses previously associated with IP activity will be blacklisted by the service.

New York, the creator of the “BitLicense” framework, still has one of the strictest regulatory regimes for cryptocurrency exchanges, and this is why just a few crypto companies have been authorized to operate in the state, offering their services to the residents of New York.

These kind of regional restrictions, along with the continuous increase in the number of hacks to centralized cryptocurrency exchanges, has led to many within the industry to be optimistic about the present and future development of decentralized exchanges. Well-known centralized exchanges such as Huobi, OKEx and Binance, have even announced plans to develop their own platforms, similar to that of DEX, so as to complement and probably replace their centralized services.

How Can IP Addresses be blocked by a Decentralized Exchange?
Ethereum DEX IDEX
With IDEX, users can trade above 400 Ethereum-based tokens against ether (ETH). The Panama-registered Aurora Labs S.A is responsible for operating the IDEX, which has developed a several crypto tokens, blockchain applications, and protocols. TokenData revealed that $5.3 million was raised by the firm during an initial coin offering (ICO) concluded in January. IDEX is ranked the 114th-largest cryptocurrency exchange by CoinMarketCap with a $2 million daily turnover and a $39 million 30-day volume.

IDEX is described by Aurora as a decentralized exchange, which explains the “DEX” in IDEX. It also relies on some centralized off-chain infrastructure. The firm explains that: “By separating trade matching from execution, IDEX provides the speed and user experience of centralized exchanges combined with the security and auditability of the Ethereum Blockchain.”

Compared to some other decentralized trading platforms, the user experience is improved by the hybrid model, maintaining the most important feature of leaving the funds in the hands of the user to be controlled by them. However, at the same time, it requires that IDEX should be the only entity authorized “to submit signed trades to Ethereum.” As a result of this, traders who want to have the experience of a fully-decentralized experience may have to switch to platforms with a friendlier user experience for reduced reliance on off-chain services.