Bitcoin Forum

Article by Crypto Briefing: https://cryptobriefing.com/bitstamp-begins-track-off-exchange-addresses/

Basically when withdrawing from BithumbBitstamp, you would need to show proof that you own the address you're withdrawing too first.

While this rule seems to be enforced only to their users that reside in the Netherlands, I wouldn't be surprised if they would apply the same rule for exchange users in countries in the future.

While you're at it, screw using KYC exchanges. Make it a habit of using exchanges that respect your privacy.

Full credits to @plan_marcus on Twitter for the screenshots below.

https://i.imgur.com/z2ghhTE.pnghttps://i.imgur.com/HZy1S2i.png

What nonsense. I thought Netherlands were big on the whole "personal freedoms" thing? And now they are introducing KYC for your own addresses!? No transactions allowed unless the government can put a name and a face on it. This is the next step on a very slippery slope towards governments taking control of bitcoin.

I note as well that Bitstamp "automatically enabled" (i.e. forced) this feature without any prior warning, essentially seizing their customers' coins and holding them ransom unless they comply with this incredibly invasive nonsense.

People need to stop accepting this kind of ridiculous snooping like they do with Coinbase, BitPay, Binance, Bitstamp. As long as we keep giving money to these unethical companies, they will continue to abuse us and keep trying to turn bitcoin in to something that makes them money and that governments can use to oppress you. Stop it. Trade peer to peer, eliminate third parties, and use bitcoin in the way it was intended to be used.

Bitstamp is not the first exchange that has been forced to comply with Dutch law. About two months ago, Bitonic Netherlands-based exchange reported it had been forced by the country's central bank new requirements to implement new KYC measures, which include address verification via uploading screenshots or signing a message with a private key corresponding to the said address.

https://www.coindesk.com/dutch-crypto-exchange-adds-extra-verification-measures-citing-disproportionate-central-bank-requirements

It's not the exchanges doing it. It's the Governments of these countries.
Yes the rules suck. Yes places like Bitstamp / Coinbase / etc. should be fighting against it. But, for them not to do it would be insane.

In the US could you picture what would happen if Chase decided to let people open accounts with no ID?

Sadly it has come to this, looks like the US will be the next on the list of these insane requirements.

-Dave

LOL. It is long time I laugh at such ridiculous news.

Do I have to show proof that I own my bitcoin from the address I will use to make a deposit to an exchange? No.
They (Bitstamp) accept all deposit but when withdraw, they ask customers to show proof of ownership for the receiving address. What if the receiving address is the one I use to make deposit (before the withdrawal request). Do I still have to prove it?

And do it for any crypto on the exchange: https://coinmarketcap.com/exchanges/bitstamp/. It's not fun.

Let's make Bitstamp not your favorite exchange.

Absolutely. I assume such rules will probably spread through Europe, and I've been reading suggestions that we will soon be facing a similar situation in the US. Governments aren't just going to let you break free of their easily manipulated fiat system to something they have no control over without putting up a fight first. However, that doesn't mean we can't or shouldn't rail against these exchanges for enforcing the government's draconian laws. If an exchange enforces this, then its time to leave that exchange. I guarantee that if everyone stopped using Bitstamp because of this, they would pretty quickly find some way around it or challenge it in court, but unfortunately that is never going to happen.

When this becomes widespread there will be a big uptick in mixer traffic, since everyone who withdraws to a KYC address would be crazy to not immediately mix or coinjoin their coins. And there will be ever more DEX volume, which is never a bad thing.

"There are three kinds of lies: lies, damned lies, and statistics." - Benjamin Disraeli

Yes. But it doesn't really make the situation any better.

If I understood the whole thing well, the user has to prove that he is the owner of the address to which he will withdraw the transaction - by sending a message from that address or by taking a selfie of himself and the coin address? What follows is a signed and certified statement that withdraw coins will not be used for anything illegal under threat of imprisonment or payment of some high fine ::)

---

There are those who have been saying this for years, especially since they introduced the insanely strict KYC and all the possible checks that come to their mind.

Is Bitstamp still a good exchange for trading? (https://bitcointalk.org/index.php?topic=5202585.msg55331583#msg55331583)

Proof of non-custodial wallet ownership has been discussed in other topics before and it's slowly implemented by major exchanges. DEXs will welcome this news with open arms.

You mean Bitstamp?

The email just says photo so writing all the characters on a piece of paper then taking a selfie.

the biggest problem we are facing is that people still don't want to treat bitcoin as a currency and only are interested in trading it to make more fiat out of it.
otherwise if people started "earning" bitcoin, we no longer would see issues like this.

the problem is that sadly we don't have that alternative. we only have decentralized P2P methods of trading bitcoin that are hard to use, have low liquidity, big price spread and are slow to fill an order at times.

Dayum. Never used Bitstamp and would probably never use it afterwards. requesting proof of ownership is just too much imo.

While not decentralized, LocalCryptos is still a far better option due to not requiring KYC. We also have Bisq, but barely anyone uses it so it's really not that much of a viable option today.

Localcryptos is definitely a good option, but not suitable for those seeking for profits.

Given the fact that the vast majority of people treat bitcoin as a speculative asset, they will continue to use centralized exchanges so that they can make a profit in dollars. More often than not, they are not interested in long-term hodling, but in short-term, mid-term trading, and investing. They mostly don't care about privacy, sovereignty, decentralization, liberty, bitcoin principles in general. They are not against any ridiculous policies such as KYC procedures, address verification, mass surveillance, etc. What they want is profit, they are ready to sell their souls to acquire additional penny. They are dollar maximalists.

Which is ridiculous, when you think about it, given how easy it is to fool a selfie. I can import any address in to a wallet like Electrum and then take a selfie with it. That proves nothing. If you are using a web wallet then it is even more trivial - just open developer tools and you can change the address which appears in your wallet to anything you like. Lets say I want to withdraw from Bitstamp directly to a gambling site. I can just create a brand new blockchain.com wallet (for example), change the address which appears to the gambling site's deposit address in <10 seconds, and take a selfie with it. The whole thing is pointless. It will achieve exactly nothing in the fight against money laundering, will achieve a great deal in every government's pursuit to monitor all their citizens.

If you are interested in day trading, then what is stopping someone from using a P2P platform such as Bisq or LocalCryptos to on-ramp from fiat in to bitcoin, and then transfer that bitcoin to a non-KYC exchange to trade between bitcoin and stablecoins or altcoins? As much as I hate stablecoins and most altcoins, if I were a day trader I would see trading pairs using them as the far lesser of two evils when compared to completing KYC somewhere. Of course, there is still the risk that the non-KYC exchange you are using suddenly turns round and demands KYC, however.

That's why I asked if that was really the case, because it really doesn't make sense to me - as you say, this measure can very easily be circumvented in the way you described. If they really wanted to achieve something, then they had to ask for a signed message from the address, but it is still a slightly more demanding procedure, for users and for the exchange.

It seems to me that clients will have to agree to this request, but also very likely to many others that will be put in front of them in the future - of course if they want to continue to use centralized crypto exchanges.

If this is coming to The Netherlands, then I suppose it's coming to the EU and the US soon as well?! I mean, there was a rumor that the US gov was planning to do exactly this - and here we go!

This is so close to the "virgin coins will be more expensive than tainted ones" narrative it's scary. I just wish Bitcoin users wake up before it's too late. Ditch them privacy-stripping centralized exchanges - ditch them all!

This is so dumb, how does a photo with an address proves that you own it? You can take a photo with any address that you want, so if your goal is to withdraw to someone else's address, this regulation is not stopping it. Even signing a message isn't a strong proof, you can ask someone else to sign a message with their address. This law achieves absolutely nothing except for creating annoyance to users of centralized exchanges and more work the exchanges. It won't do anything to prevent money laundering or other illicit activity, and it won't even allow the government to better track Bitcoin transactions.  Whomever came up with this idea must be completely tech illiterate.

Brought to you by the same idiots who came up with "Let's ban encryption!"

Rule of thumb: always expect the worst when it comes to privacy on exchanges(or services in general) with or without KYC. Dare I say that it will just get worse from here as Bitcoin gets bigger.

While other countries aren't like super strict yet, it's a fair assumption to think that they will follow suit after sometime.

The fact that one EU member state implements something does not necessarily mean that it will be adopted by other member states, so AML5 is not applied in all member states, and it has been more than 1 year since it was supposed to enter into force. I live in the EU, and luckily I can still buy and sell significant amounts of crypto without any KYC or fear of tax because there is a loophole in local law that allows it.

The Trump administration initiated the procedure, but Biden already froze the decision and sent it for review.


Of course, this does not mean that this decision will not be implemented, nor that there will be no other decisions that the crypto community will not like. Trump did not have a positive opinion of Bitcoin, but he clearly did not have people around him who could make a significant difference - it remains to be seen how capable or not the people from the new administration are.

Didn't read the whole article to be honest, however, nether can I see how a photo of the address actually proves it's actually yours. It might not affect me at the moment, but I wouldn't be surprised if it passes to other EU countries in the distant future. I was actually looking for an excuse to switch exchanges but couldn't bother doing it.

Bitstamp has way higher fees anyway (0.05%), compared to other exchanges, I don't even want to bother totalizing the money I've spent in fees.

It might sound stupid for now, but the picture will be clear when one day all major/Western/Western-aligned economies require that exchanges (serving also as custodial wallets) only do business with users who only send their coins to addresses belonging to users who have verified addresses at other exchanges/custodial wallets. It's getting bad, and it can get a lot worse.

The additional KYC requirements were proposed by former Secretary of the Treasury Steven Mnuchin. The incoming Secretary of the Treasury, Janet Yellen, is on record as saying that cryptocurrencies are used "mainly for illicit financing", that the government should "curtail their use" and make sure that "money laundering doesn't occur". I can't exactly see her taking a sympathetic approach and deciding to overturn this particular proposal. If anything, I suspect her to push ahead with it even harder. The freeze is simply because Biden wants his people to have time to review all the proposals that Trump's people were working on.

Now would be a good time to start getting all your funds off of centralized exchanges, before they get locked behind mandatory KYC processes.

I saw this discussion between the bitstamp customer service rep, at the bitstamp reddit site, and a former user. Seems to sum things up prety well

https://www.reddit.com/r/Bitstamp/comments/ktmm1u/which_info_and_documents_are_required_for_full/


[–]Bitstamp-Lucas[🍰] 2 points 13 days ago
Our KYC procedures are in place so that we can provide a safe exchange platform to our users and also comply with our various regulatory obligations. I understand that it may be seen as an inconvenience, but it's done with the greater good of all our clients in mind. Having said that, you should still be able to withdraw your funds normally.


  [–]Twitxx 3 points 13 days ago
Inconvenience? You're straight up locking people out of their accounts because they can't provide things like trading history at other exchanges dating back 5 years, salary payslips, bank statements, investment portfolios, trading information/activity, proof of conversation with clients, proof of freelance activity, and that's on top of the basic kyc procedures such as the ones described by op. One of the best things I've done was to quit using bitstamp before all of this non-sense started going down. I have had issues with you before due to asking to re-confirm my address while I was out of the country, but all of this seems impossible to provide, not mentioning that all of this data you're gathering is just sitting duck, basically asking for a hack. Imagine losing all of your personal details to a data hack, just because the KYC procedure on some website wants to every single detail about your life. Yucks!

Some of the other response in that Reddit thread are pretty eye opening too. One user, who has been told that his account is going to be locked on January 31st if he does not provide years old information regarding source of funds, says he cannot provide this information since he no longer has an account with exchange the funds came from and they have been unable to help him. Other users say that funds came from exchanges which no longer exist at all, so there is no way of providing proof of source. The response from support is: "I suggest you try to contact them."

I fully expect there is going to be a flood of complaints against Bitstamp in the coming weeks. There will be a number of users who think they have provided all the necessary information only to find that their accounts are locked anyway, and there will be a number of users who are completely unaware of this entire situation. All these users will then be hit with excessively invasive requests for KYC and other information which they either do not want to provide or may be impossible to provide, as the information Bitstamp are asking for simply doesn't exist. All these users will have their accounts frozen and their bitcoin essentially held hostage.

Unless you are comfortable handing over details of your entire financial history, from standard KYC through to your salary, copies of your pay checks, your complete bitcoin transaction history and holdings, and so on, then you need to get off of Bitstamp and other centralized exchanges now. Given the chaos from a database of only names and addresses being hacked, I can't imagine the fallout when one of these databases of financial histories is inevitably hacked.

People have been preaching this everywhere for a while now. A lot of people are going to learn their lesson the way how Mt. Gox users learned theirs.

This is bad. Really bad. Imagine if a lot of countries are doing the same. Governments are trying to kill the term “decentralization”. Regulatory moves like this are destroying the purpose of decentralization. Unless of course, if paper bills and physical coins are gonna phase out and we are going cashless transactions and merchants accepting cryptos, in that way, government will have a hard time regulating it.

the USA is heading that way. they proposed very similar regulations. they're currently on hold but i don't expect that to last long.

i won't be surprised if exchange customers are eventually just handing over a master pubkey to exchanges under legal declaration. i'll bet 80% of them won't even realize the implications, and will just give the exchanges an open door into all their financial activities.


i wouldn't say that. as usual, they are leveraging their power over industry to force centralized entities into attacking our privacy and scaring us into legal/tax compliance.

decentralized protocols like bitcoin---unaffected.

Yeah, I've been saying it for years. First from a "not your keys" point of view, then from a privacy point of view, and now this. The reasons not to use a centralized exchange just keep stacking up.

Agreed. Biden's blanket freeze on new regulations happened to also catch these crypto regulations but that doesn't mean he is opposed to them by any means, and Mnuchin's replacement is just as hostile to crypto as he was.

There will surely be a big surge in interest in mixers, coinjoins, and other methods of obfuscation, which presumably exchanges will try to counter with more widespread and invasive blockchain analysis and blocking users who try to maintain any semblance of privacy. What a mess. We desperately need easier peer to peer trading with much larger volumes.

There is another Dutch cryptoservice provider called Bitonic that appears to be taking this issue to court.


https://bitonic.nl/en/news/220/bitonic-files-preliminary-injunction-to-be-relieved-of-wallet-verification-requirement


Don't know if Bitstamp is involved at all with this.

It has some benefits in terms of security though. A hacker can't withdraw your funds in case your account has been compromised and besides that, In my case, I never send fund to third party wallet directly from my exchange wallet. Bitstamp also enforce by KYC too so basically user that still using there exchange are willing to undergo KYC or other verification process though.

I don't see this news as total bad news. Bitstamp is a centralized exchange so user must not expecting a decentralized feature on using it.

A very small benefit. A similar level of security could be reached by everyone using proper 2FA, requiring withdrawal addresses to be registered and confirmed via email and 2FA, and registered withdrawal addresses being unavailable for use for 48-72h after registration. All possible without requiring any personal information or KYC.

Conversely, the security risk to providing such a huge amount of personal information is massive. It's enough information to steal an identity, take out tens of thousands of dollars in loans or credit, and completely ruin someone's life.

Sure, when you use a centralized service you can't expect the same things you would expect from a fully decentralized service, but this level of privacy invasion is something else entirely.

"People in comparatively free countries think Bitcoin is about memes, Virtue Signalling on Twitter and other inconsequential things. Having fun is important, but facts about people suffering open tyranny as described here needs to be widely disseminated, exposed, and roundly condemned. The people doing this must be shamed into total submission, their ambassadors openly ridiculed and their national pride wounded."

A Tale From Bitcoin’s Future? (https://medium.com/@beautyon_/a-tale-from-bitcoins-future-6b9cc2ba3b8d)

Any US people or US citizens use bitstamp?