Why do crypto exchanges hate American users?

Strict rules in the United States have made the country a difficult place for crypto exchanges and crypto exchanges.

But why do some exchanges hate to work in the US? Why are they blocking US users?

Why do crypto exchanges reject US customers?

From an exchange's point of view, US crypto regulations are a minefield. Individual states have developed their own laws, the process for applying for a crypto license is not the same across the country, and there is absolutely no operating structure for crypto and blockchain businesses.

At the very least, an exchange operating in the USA should:

  • Register with the US Securities and Exchange Commission.
  • Register on the Financial Crimes Network.
  • Apply for individual crypto licenses in all states where they are required.
  • Apply for a license to transfer money to work with banks.
  • Create a system to combat money laundering.
  • KYC for each user.

Of course, many of these requirements run counter to the anonymous decentralized ideals of crypto protection. This is alienating to both users and the business blockchain.

Many problems also surround certain coins. For example, Poloniex no longer offers ARDR, BCN, DCR, GAME, GAS, LSK, NXT, OMNI, or REP in the US due to its “undefined regulatory environment”. In a May 2019 announcement, the company stated that "it is impossible to be sure if the US regulators will treat these assets as securities."

Here's what the then Poloniex Legal Director said:

“There is no doubt that the current regulatory approach to cryptocurrencies in the United States creates uncertainty and can harm innovation. We advocate for a clear, forward-looking regulatory framework so that the United States can fully realize the potential of crypto and blockchain technologies. This propaganda will continue and grow, especially now that Facebook's Libra is forcing many to reckon with crypto for the first time. "

Many critics place the blame directly on US lawmakers. Cryptocurrency proponents argue that the lack of response to the rapidly growing crypto sector has resulted in a lack of transparency and confusion. As a result, the domestic crypto sector suffered greatly.

The history of Binance is a familiar story

Although these problems existed for several years, in June 2019, the situation became especially apparent. It was then that the world's largest crypto exchange Binance announced that all of its US customers will be blocked from using its main platform. The ban came into force on September 12.

As such, Binance joins a long list of top tier crypto exchanges that have chosen not to operate in the US. More than half of the top 30 countries have restrictions in one form or another for everyone who lives in the country. The list includes Bitfinex, Poloniex, Bittrex, Bancor, OKEx, Huobi, HitBTC, Kraken, CoinBene, and LBank.

Bancor reiterated the words of Poloniex and Binance in his own statement at the beginning of 2019:

“In the light of increased regulatory uncertainty, we believe that restricting US users from performing conversions through our web interface is the most reasonable solution for all members of the Bancor ecosystem at this time.”

Interestingly, during the announcement of the ban, Binance simultaneously announced the creation of a new platform: Binance.US. She should start recruiting clients this week.

At launch, it will be a pale imitation of its older brother. Users will only be able to make deposits in BTC, ETH, XRP, BCH, LTC and USDT. Perhaps even worse, only 30 tokens are expected to be available for trading. Rumored to be ADA, ATOM, BAT, BCHABC, BNB, BTC, DASH, EOS, ETC, ETH, HOT, IOTA, LINK, LOOM, LTC, MANA, NANO, NEO, PAX, REP, RVN, TUSD, USDC, USDT, VET, WAVES, XLM, XRP, ZIL and ZRXalthough the final list has not yet been officially confirmed. Unlike the global platform, Binance offers over 150 coins. Some exchanges support several hundred.

Despite the fact that most of the company's business comes from the United States, Binance CEO Changpen Zhao believes that a solution was necessary:

“Some short-term pain relief may be necessary for long-term benefit. And we always work hard to turn every short-term pain into long-term benefit. ”

How can Americans buy crypto?

For people who want to buy only basic coins, there are many more options.

Coinbasewhich dominates the US crypto landscape offers Bitcoin, Ethereum, Bitcoin Cash, Litecoin, and Ripple. Several other changes, including the new Binance.US, provide access to an equally limited number of assets.

But where can Americans buy altcoins? The best solutions are increasingly decentralized exchanges. We've covered some of the best decentralized crypto exchanges. We found Changelly, Shapeshift, IDEX, Waves DEX, Komodo BarterDEX, Relay Radar, and Block DX to offer the best combination of coin price and availability.

Learn more about trading.

For a start Use our beginner tips

Rate this article
Blockchain media