Charles Hoskinson’s latest musings on X have sparked a fresh debate in the crypto industry. His idea of a cooperative-style centralised exchange (CEX) where listed tokens and customers own a stake, with profit-sharing based on trading volume, has intrigued many. The concept of structuring it as a bank, allowing for crypto deposits and issuing yield-bearing stablecoins, adds another layer of innovation. The post quickly drew a response from Dominic Williams, who suggested an order book exchange built on ICP, governed by a Service Nervous System (SNS), a decentralised autonomous organisation (DAO) model that enables full community control, including software updates.
The idea of a cooperative exchange challenges the traditional models that currently dominate centralised trading platforms. Existing exchanges operate as corporate entities with clear hierarchies, benefiting their founders and investors while users remain fee-paying participants. Shifting this dynamic to a cooperative structure could change how users interact with exchanges, potentially offering more financial incentives and decision-making power. The notion of profit-sharing proportional to trading volume is particularly compelling. It aligns incentives, rewarding active traders while creating a sense of shared ownership. If this approach gains traction, it might encourage more engagement from retail investors who often see themselves as outsiders in an ecosystem controlled by a few major players.
Hoskinson’s idea of structuring the exchange as a bank raises interesting regulatory and operational questions. Regulatory scrutiny around crypto exchanges remains high, with concerns about money laundering, consumer protection, and market stability shaping global policies. If a cooperative exchange were to function as a bank, it would need to comply with strict banking regulations, which vary across jurisdictions. The advantage of such a setup would be the ability to offer crypto-native financial services, including deposits, lending, and stablecoin issuance. A regulated entity could also help bridge the gap between traditional finance and digital assets, giving institutions more confidence to participate. However, achieving this level of regulatory approval is no small feat, particularly given the complex and often fragmented legal landscape surrounding digital assets.
Dominic Williams’ response brings another layer to the discussion. By proposing an exchange built on ICP and governed by an SNS, he introduces a fully decentralised framework that would allow users to influence decision-making directly. The SNS model has been positioned as an alternative to traditional DAOs, offering an automated governance system that removes single points of failure while enabling the community to control updates and policies. An order book exchange under SNS governance would shift control from central entities to the users themselves, potentially reducing risks of mismanagement, opaque policies, and unilateral decisions that often plague centralised platforms.
The idea of building an exchange on ICP is an interesting counterpoint to the cooperative CEX model. ICP’s architecture is designed for high scalability and low-cost transactions, which are critical factors for an order book exchange. Decentralisation in governance could further align with the broader crypto ethos of removing intermediaries and giving users greater control over financial systems. However, running a fully decentralised exchange presents its own challenges. Smart contract security, regulatory grey areas, and maintaining a seamless user experience remain significant hurdles. Fully decentralised platforms often struggle with liquidity, as market makers and institutional participants hesitate to engage in environments with uncertain compliance measures and slower execution speeds compared to centralised alternatives.
A cooperative exchange model could provide a middle ground between the efficiency of centralised platforms and the transparency of decentralised systems. By giving users ownership and a stake in profits, it creates an economic model that could drive greater loyalty and long-term engagement. It also opens the door to novel governance mechanisms, where decisions about listings, fees, and operational policies could be determined collectively rather than by a corporate board. The biggest challenge would be implementation. How does one ensure fair distribution of ownership? Would early adopters receive a larger share, or would there be a system that adjusts over time? How would governance be structured to prevent manipulation by a few large holders? These are the types of questions that need addressing before such a model could move from concept to reality.
If an exchange were structured as a bank, it could also take a different approach to stability and risk management. A yield-bearing stablecoin issued under this framework would require clear mechanisms for reserve management and regulatory compliance. Given the increasing scrutiny around stablecoins from regulators worldwide, ensuring transparency and stability in such a model would be a key concern. A cooperative bank-exchange hybrid would need to balance user ownership with institutional-grade safeguards to attract both retail and professional participants.
The discussion also highlights the broader shift towards more community-driven financial models in the digital asset industry. DAOs, token-based governance, and user-owned platforms are gaining traction, challenging traditional hierarchies and business structures. While fully decentralised systems face significant roadblocks, hybrid approaches that integrate cooperative ownership with elements of decentralisation could find a stronger foothold. Whether this manifests as a cooperative CEX, an SNS-controlled exchange, or some other model remains to be seen, but the conversation itself signals an evolving landscape where users demand more than just passive participation.
Hoskinson’s history in the industry suggests that his ideas often carry weight, even if they take time to materialise. The Cardano ecosystem has been built on principles of rigorous research and structured governance, which could influence how this cooperative exchange concept develops. If such a model is pursued within the Cardano framework, it could leverage the blockchain’s existing infrastructure for identity, compliance, and scalability. Similarly, Dominic Williams’ advocacy for ICP-based solutions reflects his broader vision for a fully decentralised internet, where services are owned and governed by their users. The intersection of these ideas—cooperative ownership, decentralised governance, and regulatory structuring—could shape the next phase of crypto exchanges.
There are many factors to consider before such an idea could be executed. Regulatory acceptance remains the biggest hurdle. Exchanges, whether centralised or decentralised, operate in an environment of increasing scrutiny. Any attempt to integrate banking functions would only heighten the regulatory complexity. Even if the cooperative exchange remained purely crypto-focused, legal classifications of securities, financial instruments, and consumer protections would still need careful navigation. Additionally, the technological feasibility of implementing a profit-sharing model based on trading volume would require robust smart contracts and real-time data management.
The broader crypto industry has experimented with various exchange models, from fully centralised giants to decentralised alternatives. Hybrid models, such as those proposed by Hoskinson and Dominic Williams, could represent the next step in finding a balance between control, efficiency, and user ownership. Whether the industry is ready for such a shift depends on multiple factors, including technological advancements, regulatory frameworks, and market appetite. For now, the discussion itself is valuable, prompting industry leaders to rethink the structures that govern digital asset trading and financial participation.
This conversation underscores the fact that the industry is constantly evolving, and ideas once seen as radical can quickly become mainstream if the right conditions align. Whether a cooperative CEX or an SNS-governed order book exchange becomes a reality, the very fact that these models are being openly debated suggests that traditional structures are being questioned more than ever. The question now is whether the industry is ready to take the leap into truly community-driven exchanges, or whether centralised incumbents will continue to dominate. Either way, the debate is far from over.
