Starting in September 2019 popular cryptocurrency exchanges such as Binance and Bittrex will begin using geoblocking to restrict trading and other functions of United States crypto investors. Here are some important things for you to know if you live in the US and are affected by these crypto exchange blocks.
No Trading on Binance for US Residents
Some believe that changes may be coming to the cryptocurrency scene in the US because Binance is restricting US access beginning September 12, 2019. We have discovered that there is a lot of misinformation about the geoblocks and will try to sort this out in our discussion. First let’s look at exactly what is happening at Binance and how it will affect crypto investors in the US.
An official announcement from Binance reads:
As we understand it, trading will cease for US Binance customers. The balance in the accounts of these individuals will not be affected and can be withdrawn subject to existing KYC (Know Your Customer) regulations.
The block also affects the Binance DEX Exchange. Bittrex and Poloniex will continue serving US customers but will not allow access certain alt-coins. In the past Binance has also geoblocked other countries but has subsequently opened up an exchange that complies with restrictions for the geoblocked areas. Ifyou are on the lookout for a vpn service to bypass geo restricitions, visit https://www.vpn-accounts.com
Why Are Binance, Bittrex, and Poloniex Geoblocking in the US?
Geoblocking of US residents is not all that uncommon when it comes to cryptocurrency exchanges. The issue stems from gray areas in US financial regulations regarding certain altcoins. Altcoins are coins like Litecoin, Ripple, and Stellar Lumens which are an “alternative” to Bitcoin. Any digital token besides Bitcoin can technically be classified as an altcoin.
When altcoins are released they usually do so via an ICO or Initial Coin Offering. This is similar to an IPO that can be offered by new companies on the US stock market. It represents the first opportunity that investors have to purchase the new digital token before it goes live to the general public. You can think of it in some ways as a pre-sale of the new digital currency.
The problem is that in 2017 Bitcoin experienced a huge market move to the upside. The value of the token rose so high that many people chose to develop an introduce their own altcoin in the hopes of making a quick profit. Some of these ICOs were very suspect. You can read our discussion of Bitnation and its founder Susanne Tarkowski about the problems with the Bitnation ICO. Other ICOs were outright scams leading to the arrest of several individuals.
In the US the issue was addressed promptly by the Securities and Exchange Commission. It notified altcoin developers and investors that an ICO could be considered as an unregistered security. This basically put all altcoins developed after July 25, 2017 in a very legal limbo. The US continues to struggle with what to do with cryptocurrencies and how to regulate them.
Some exchanges have found it easier to restrict access by US customers rather than take the risk of being in violation of any restrictions that may appear in the future.
How Binance Is Working to Help US Crypto Traders
It should be pointed out that Binance is making an effort to help US crypto traders with the issue by planning to launch its own US-based cryptocurrency exchange. This exchange will eliminate the inclusion of coins that may be in violation of the non-existent US regulations.
No official timeline has been announced for the launch of the crypto exchange in the US, but it appears that it could happen by the end of 2019. In the meantime the US customers that did have an account on Binance can still keep the balance of their crypto wallets on the exchange. They can also choose to cash out their holdings.
Those who opt to cash out will most likely be subjected to KYC regulations and be required to prove their identity. The more crypto that is withdraw the more stringent the KYC regulations might become.
US Traders Should Try These Exchanges
To evade the geoblocking that is taking place on Binance and other exchanges, traders in the US should think about using an exchange where blocking is not an issue. We recommend Coinbase and Kraken as exchanges that will be friendly to crypto traders.
Kraken is one of the most respected cryptocurrency exchanges in the world. It has a large platform and offers trading for many altcoins as well as Bitcoin. Kraken has also taken the lead in introducing options and futures trading for Bitcoin. The exchange is regarded as secure and very few problems have been encountered.
Coinbase is another respected crypto exchange that welcome US customers for trading of more than 30 different tokens on its main platform. There is also Coinbase Pro which offers access to even more tokens. Coinbase is safe and has a convenient mobile app that will let users trade crypto with their mobile device.
Crypto Exchanges and US Regulations
At the present time the regulations in the US for altcoins and ICOs is still very undefined. It is expected that this will change as time passes, but the progress could be very slow. The US government is finding it difficult to come to terms with Bitcoin and other cryptocurrencies as an asset class.
While the status of crypto exchanges in the US is being debated there is no reason for US crypto traders to suspend their activities. As we mentioned above there are many other options for traders to use. When signing up for any exchange the investor is to use due diligence. We advise that you stick with the crypto exchanges that we have recommended for you to use. Please read our exchange reviews to choose the exchange that is right for you.
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