It sure is. I won't lie, this is probably going to end with lots of disgruntled exchange customers, frozen money, closed accounts, unexpected law enforcement investigations, etc. I've always been extremely careful to ensure that anything touching my Coinbase account is unimpeachable. Unfortunately with the way things are headed, we'll need to employ that sort of caution to most services -- maybe even lower tier exchanges registered in random island nations. You just never know.

The traditional answer in a free market is "supply and demand." When buyers outnumber sellers, price rises.

Regulators usually aren't responsible for price movements, except where markets are controlled. One example would be the Chinese Yuan, which isn't a free floating currency like most fiat currencies. It's pegged to the US dollar by the Chinese government.

The idea of banning gold would have seemed crazy in the 30s, but that's exactly what the FDR administration did. They banned private gold ownership beyond 5 troy ounces. Everything else had to be sold to the state. The ban wasn't lifted until the 70s. So the government could theoretically criminalize the act of owning bitcoins beyond specified small amounts just the same.

Obviously this couldn't be effectively enforced, but neither could the gold ban. The fact is that most people fear the government and respect the law of the land, so they disposed of their gold then and would dispose of their bitcoins now. Forcing Bitcoin into the black market would quickly cut the market down in size.

That's the million dollar question. For now, nobody really knows. To my knowledge, Gemini is the only service that specifically prohibits interfacing with mixers in their user agreement. I don't think they'll be the last, though.

Exchanges will likely take a risk-based approach, with a spectrum of different policies. The worst of them will do as Bitstamp already does -- demanding proof of source of funds for every satoshi deposited. Others may only flag accounts that deposit specifically dubious coins that are sent directly from DNMs and things like that.


Well, what's sensible?

The FATF has set a June 2020 deadline (one year) for countries to codify the Travel Rule into national law. At that time, they'll issue a statement flagging countries that are non-compliant or not working towards implementing the rules.

They have no real power to enforce anything of course, but there is an element of "soft power" as governments pressure each other into compliance. My guess is that some/most of the 36 member countries will have passed complying laws by that time. It might take a while longer than that before laws take effect and compliance is widespread.

The Jersey exchange was intended to "help bridge the crypto-fiat channel for Europe and the U.K." European and UK traders were never barred from using Binance.com.

That's what makes this a distinctly different case. The US site is meant to function not only as a fiat gateway but also as a replacement for Binance.com. That's why I think they felt the need to suggest that dozens more listings are coming in their blog last month.

You're only talking about price. That doesn't say anything about Bitcoin's success as a peer-to-peer currency constantly increasing in adoption.

Your attitude reveals something about your true motives: Your primary concern is profit. That's obviously why you promote altcoins like ZEIT while constantly bashing Bitcoin.

Sounds tragic for fungibility. Maybe that's the point.

Maybe this will provide the impetus for larger scale adoption of P2P trading. Growing fears about frozen funds and customer due diligence demands by exchanges could drive traders towards Bisq and similar decentralized alternatives, which appear to have escaped FINCEN regulation.

That's not set in stone. Nothing the FATF does is binding. They just pressure individual governments to implement their standards -- it often doesn't actually happen. None of the FATF member countries have even passed complying legislation yet, let alone the rest of the world. Anything that exchanges do to comply at this point is completely voluntary, not required. And then, once laws are actually passed, enforcement is another question entirely.

They're just the "good cop" in a good cop/bad cop scenario. It's easy to think Ciphertrace is here to help you, but their primary role is convincing you to swallow these incredibly invasive AML requirements. At best, they're profiting from government overreach. At worst, they're literally just an arm of governments like the US.

It may not affect the protocol, but it can certainly affect the price. The trustee would issue and redeem shares based on market demand, meaning an ETF could conceivably lead the rest of the market due to arbitrage forces. The same goes for Bakkt or any other physically delivered bitcoin contracts. Plus, ETF shares can be short sold. When I strap on my tin foil hat, I can see some scenarios where Wall Street keeps a lid on bitcoin prices through these avenues, the same way they supposedly do with gold.

They cracked down on exchanges, but they left the P2P/OTC markets and mining sector alone. Considering the periodic rumors about mining being banned, it seems like they could do a lot worse.


Tethering a CNH pair shouldn't rock the boat too much. It's not controlled like the CNY. They aren't helping people evade capital controls since it's already on the offshore market.

The most interesting thing that could develop from an ETF is people investing tax-free through their 401(k)s. It wouldn't be available at first through most employer plans, but it could be done through self-administered accounts. Eventually, who knows? Maybe Blackrock and similar firms will be offering exposure through regular employer plans within a few years. If there's demand for it, they'll make it happen.

One practice to note is the aptly named shadow banking. Chinese exchanges OKCoin and Huobi were caught secretly borrowing CNY from their depositors and using it to purchase high yielding investments like Chinese debt instruments. You can read more about that here. Arthur Hayes from BitMEX actually speculated they were shadow banks years before evidence came out.

I tend to agree -- it's a free market and all that. Although it does make me uncomfortable when I think about how much of the circulating supply is in the possession of a handful of entities like Coinbase, BitMEX, Bitfinex, Xapo, etc.

What is this "Bitcoin community" you speak of?

Unfortunately, an ETF or other custodial Bitcoin securities is inevitable. Wall Street doesn't care about our principles. Besides, this space has been overrun by people more concerned about getting rich than being their own bank. Investors believe that an ETF or Bakkt = institutional money driving prices up, and that's what matters to them. I consider this a lost battle.

It'll all end in tears when an ETF trust or Bakkt's vaults get cleaned out, or trustees get caught "printing" custodied bitcoins. Real bitcoiners will be unaffected, though. That's what matters.

Those are pretty huge barriers affecting a big swathe of African countries. In the case of Burundi, it's literally almost the poorest country in the world and its president recently changed the constitution so he could potentially rule for like 30 years. I'm not expecting countries like this to devote any resources to cryptocurrency policy development.

How does that protect from fake data? I'm not sure I understand this distinction between "ticker" and "trade" data. The volume data coming from exchanges and the coin supplies themselves are the problem. Any service like CMC needs to figure out a way to filter that data.


How do you know most of Litecoin's volume is fake and most of BSV's volume is real? BSV is mostly listed on lesser known exchanges with suspicious volume numbers.

Yikes, social security number? That will be a deal breaker for some. I passed on joining Gemini because they required SSN, so of course I won't be going anywhere near Binance.US, who is far less trustworthy.

I wonder if this is just for AML compliance, or if they actually plan on sending 1099s to the IRS.

It's a lot more complicated than that. People are overestimating the effectiveness of the FATF. Some of the countries where exchanges are registered today -- like Seychelles -- are already not compliant with FATF rules. The notion of Seychelles implementing the Travel Rule anytime this decade is a joke. There are dozens and dozens of countries like this:


The elephant in the room is how many problems this will create for users of non-compliant services. If BitMEX refuses to comply -- especially because Seychelles is unlikely to pass related laws anytime soon -- will BitMEX users have problems cashing their bitcoins out at exchanges like Coinbase?