Increasing regulatory pressure has prompted cryptocurrency derivative trading exchange BitMEX to take new and more aggressive measures to prevent unauthorized access by US and Canadian residents.
Popularity of BitMEX
Since January 2018 the cryptocurrency market has only experienced a decline. Amidst the bear market, BitMEX, a Hong Kong-based crypto derivative trading platform gained popularity among traders and investors, especially from the US and Canada.
The platform offers its users the ability to go long or short with leverage as much as 100x.
Since 2015 the platform does not officially permit American investors to trade on the exchange due to regulatory issues.
However, the ban did not deter investors based in the US and Canada from using a virtual private network (VPN) to access the exchange from approved locations.
Pressure from Regulators
It was reported earlier on Thursday by Sludgefeed that BitMEX has started using account screeners and is shutting down accounts of North American investors.
The action has apparently been triggered by various regulatory bodies going after unlicensed cryptocurrency trading platforms.
According to the article, Quebec’s financial regulator, the Autorité des Marchés Financiers (AMF), has written to BitMEX asking the firm to close all accounts of citizens who reside in the province.
AMF’s director of media relations stated:
BitMEX is not registered with the AMF and is therefore not authorized to have activities in the province of Quebec. We informed this company that its activities were illegal.
BitMEX has retorted by claiming that the report has had multiple errors and that the firm has a policy in place since 2015 to remove unauthorized access. The firm further claims that they are functioning under guidance from US regulatory agencies.
The exchange responded:
The [only] thing that changed in the fourth quarter of 2018 is that Bitmex began using warning banners and popups to notify all potential new users about this process.
It is expected that the clampdown will impact the firm’s trading volumes, though to what extent is yet to be seen. The company is reported to have clocked over $965 Billion in annual trading volume.
While BitMEX may have initiated actions to prevent North American investors from trading on its platforms, there are a plethora of platforms our there for investors to use. It is going to be an arduous task for regulators to crack down on all such exchanges unless a coordinated global effort is made.
Do you think that the clampdown by BitMEX will deter North American investors from derivative trading on other platforms? Let us know in the comments below.
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