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Author Topic: Exchanges should not be trading places  (Read 370 times)
countryfree
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August 13, 2017, 09:27:38 PM
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With BTC-E shut down, and BTC's price ever rising, there's a lot of pressure on all exchanges. It's getting clear their business will be more and more regulated, so I guess they should specialize. The risk is that if an exchange has several businesses, legal trouble on the exchange side may harm the other businesses. I'm talking about those exchanges which, besides exchanging cryptocurrencies with fiat money, also propose trading altcoins.

It's the money transmitting business which is heavily regulated, and accused of money laundering.

A different business is cryptocurrency trading, and I think the companies doing that should not even have a bank account. They could also remove from theirs websites all reference to any fiat currency. That business shall remain unregulated, as it doesn't deal with fiat money at all. And there's no money laundering if one customer comes in with one crypto and goes out with another crypto. Hey, many countries still consider cryptos as assets, not currencies!

Kraken, by example, is doing both businesses, I believe it will have to choose one or another someday.
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August 14, 2017, 03:39:00 AM
 #2

it is impossible to remove fiat!!!
how would people buy cryptocurrencies and trade then if there is no fiat. they deposit fiat, buy bitcoin or some of the altcoins in a dip, sell on top, withdraw fiat profit.

also there isn't much wrong with regulation if it is done right. we can see the good example of it in Japan. their Forex exchanges are now adding bitcoin to their platform and they are all regulated and working without any issues.

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August 14, 2017, 04:20:27 AM
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I believe that turning exchanges only into an exchange for crypto currency, without the participation of the currency fiat is wrong. The purpose of the exchanges is precisely that the exchanges are trading platforms where it is possible not only to exchange the crypto currency, but also to transfer it to the fiat and withdraw it from the stock exchange. Removing fiat from the stock exchange will severely restrict its activities and it will not be right.

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August 14, 2017, 04:45:45 AM
 #4

There have been many alt-only exchanges.

I don't like regulation however when it comes to exchanges YES I'd rather they be legit and held accountable/liable/are insured/etc.

I remember when gox goxed, and cryptsy crippled, it killllled the markets and prices and I was thinking 'won't it be great when there are 20+ major exchanges around the globe so there is less risk if one goes down. And won't it be great once this shit is regulated on the exchange level so I feel safer with my money on there like I feel with forex/etf's/etc'.

The blackmarket IS helping the cryptos move, however I'd rather they get their value from a safe investment POV vs a wild west finance rush with unlimited risks at every turn (aka I want my exchange to have fiat, and be regulated. I'm not a crypto fanatic as much as I'm an investor and trader, and want safety vs anonymity).

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August 14, 2017, 05:57:02 AM
 #5

The word exchange in this sense is a bit different than what we consider as exchanges in the form of fiat currency. See, due to the volatility of altcoins and crypto trading currency can be very lucrative, whereas not so much with fiat given they are vastly more stable.

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August 14, 2017, 06:56:48 AM
 #6

it is impossible to remove fiat!!!
how would people buy cryptocurrencies and trade then if there is no fiat. they deposit fiat, buy bitcoin or some of the altcoins in a dip, sell on top, withdraw fiat profit.

also there isn't much wrong with regulation if it is done right. we can see the good example of it in Japan. their Forex exchanges are now adding bitcoin to their platform and they are all regulated and working without any issues.

OP, is simply saying people should avoid KYC/AML regulations usually linked to Fiat companies and trade between Alt coins. So you would buy Bitcoins through Localbitcoin or even regulated exchanges and then transfer the coins to these unregulated exchanges to be traded. < No Fiat withdrawal will be provided >

The unregulated exchanges will be very risky, because no oversight will be done and it would attract a lot of scammers and criminals that would launder money there. ^grrrrrrrr^

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August 14, 2017, 07:15:34 AM
 #7

With BTC-E shut down, and BTC's price ever rising, there's a lot of pressure on all exchanges. It's getting clear their business will be more and more regulated, so I guess they should specialize. The risk is that if an exchange has several businesses, legal trouble on the exchange side may harm the other businesses. I'm talking about those exchanges which, besides exchanging cryptocurrencies with fiat money, also propose trading altcoins.

It's the money transmitting business which is heavily regulated, and accused of money laundering.

A different business is cryptocurrency trading, and I think the companies doing that should not even have a bank account. They could also remove from theirs websites all reference to any fiat currency. That business shall remain unregulated, as it doesn't deal with fiat money at all. And there's no money laundering if one customer comes in with one crypto and goes out with another crypto. Hey, many countries still consider cryptos as assets, not currencies!

Kraken, by example, is doing both businesses, I believe it will have to choose one or another someday.

I suspect because it's profitable for the exchanges, they'll only be doing that as a last resort when they're left with no other alternative.  Many exchanges will probably follow Bitfinex's lead and just start refusing to provide services to US customers and anywhere else the regulation (and particularly the enforcement of said regulation) is on the heavy side.  It's clearly the more financially viable option.

That said, you are right and I do agree with you.  While Bitcoin itself should never be regulated, companies handling fiat can and should be.  It's just that the exchanges won't see it that way and will fight it as long as they can.

Slightly OT, but it's funny how the US is traditionally pro-deregulation for the fiat banksters, even though they're clearly the more dishonest crooks.  It's only the little guys they go after with the regulatory equivalent of "swatting a fly with a bazooka".    Tongue

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August 14, 2017, 07:20:23 AM
 #8

You have a point, actually. I am sure these exchanges have already considered that option to avoid the possible regulations to be imposed on them. However, all of these areas of business operations can be so profitable so selecting just one can put their project projection at risk and since they have already invested heavily on infrastructure their ROI can be heavily affected. Maybe they should also consider spin-offs. As for me, the best thing to do is to transfer to another location which is considered to be friendly to cryptocurrency. I guess there are now many exchanges who are also looking into this good option.

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August 14, 2017, 07:55:48 AM
 #9

Purely for organisational purposes, I would tend to agree with you - a lot of businesses who provide services fail to do well at one thing, instead attempting to do so-so on many things. An exchange should run on a single platform and a separate entity should run the trades. It's legal protection for both the customer and the service and makes regulation a little simpler.

On the other hand, your solution doesn't sound very practical. You can remove any references to fiat, you can remove all means to transfer out into fiat, but don't believe for one moment that this will make you safe from regulation. Governments will still want to know where you got your crypto from. You'll also want to realise the profit at some point for overheads at least. Banks will want to know where you got that cash from.

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August 14, 2017, 07:58:41 AM
 #10

With BTC-E shut down, and BTC's price ever rising, there's a lot of pressure on all exchanges. It's getting clear their business will be more and more regulated, so I guess they should specialize. The risk is that if an exchange has several businesses, legal trouble on the exchange side may harm the other businesses. I'm talking about those exchanges which, besides exchanging cryptocurrencies with fiat money, also propose trading altcoins.

It's the money transmitting business which is heavily regulated, and accused of money laundering.

A different business is cryptocurrency trading, and I think the companies doing that should not even have a bank account. They could also remove from theirs websites all reference to any fiat currency. That business shall remain unregulated, as it doesn't deal with fiat money at all. And there's no money laundering if one customer comes in with one crypto and goes out with another crypto. Hey, many countries still consider cryptos as assets, not currencies!

Kraken, by example, is doing both businesses, I believe it will have to choose one or another someday.

I agree with you. The financial regulations that are coming will definitely require more costs on companies, but also mean they will need to be more specialist. Splitting these functions makes a lot of sense.
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August 14, 2017, 08:29:57 AM
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There are altcoin exchanges and there are fiat exchanges.  It's not like every exchange that deals with fiat is suddenly going to say "actually, everyone should be in crypto already so fiat doesn't matter anymore".

So the exchanges are going to stay doing pretty much what they are already because they're matching demand in the market.  If regulations get tighter, well, they can regulate their exchanges better.  Bitstamp is already pretty crazy with their KYC I hear.

That business shall remain unregulated, as it doesn't deal with fiat money at all. And there's no money laundering if one customer comes in with one crypto and goes out with another crypto.
I'm not sure about your logic here.  Bittrex is already practically preventing unverified accounts from withdrawing at all.

It's absurd to claim that exchanging between cryptos could not be illegal.  The WannaCry hackers were believed to try and go through ShapeShift.  Sooner or later there will be some government action on that.  Personally I say deal with it.

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August 14, 2017, 10:02:31 AM
 #12

There are altcoin exchanges and there are fiat exchanges.  It's not like every exchange that deals with fiat is suddenly going to say "actually, everyone should be in crypto already so fiat doesn't matter anymore".

So the exchanges are going to stay doing pretty much what they are already because they're matching demand in the market.  If regulations get tighter, well, they can regulate their exchanges better.  Bitstamp is already pretty crazy with their KYC I hear.

That business shall remain unregulated, as it doesn't deal with fiat money at all. And there's no money laundering if one customer comes in with one crypto and goes out with another crypto.
I'm not sure about your logic here.  Bittrex is already practically preventing unverified accounts from withdrawing at all.

It's absurd to claim that exchanging between cryptos could not be illegal.  The WannaCry hackers were believed to try and go through ShapeShift.  Sooner or later there will be some government action on that.  Personally I say deal with it.

Yes all good points. I think its more of a economic issue. Even in the legacy banking sector we are seeing consolidation, and smaller players focusing, as regulations become harder. The same process is bound to apply to cryptocurrency. But a level of regulation is a good thing.
countryfree
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August 14, 2017, 10:02:42 PM
 #13

it is impossible to remove fiat!!!
how would people buy cryptocurrencies and trade then if there is no fiat. they deposit fiat, buy bitcoin or some of the altcoins in a dip, sell on top, withdraw fiat profit.

also there isn't much wrong with regulation if it is done right. we can see the good example of it in Japan. their Forex exchanges are now adding bitcoin to their platform and they are all regulated and working without any issues.

OP, is simply saying people should avoid KYC/AML regulations usually linked to Fiat companies and trade between Alt coins. So you would buy Bitcoins through Localbitcoin or even regulated exchanges and then transfer the coins to these unregulated exchanges to be traded. < No Fiat withdrawal will be provided >

The unregulated exchanges will be very risky, because no oversight will be done and it would attract a lot of scammers and criminals that would launder money there. ^grrrrrrrr^

@pooya87
It is possible, I did it. I bought BTC at bitcoin.de, then I opened at Poloniex first, and Bitfinex second, transferring some coins on each account. Then I started trading altcoins.

@Kakmakr

Well, there would be no money laundering on altcoins trading sites, because technically, no money would be involved. If I open an account with LTC, and close it ETH, where's the laundering? I still can't go to a bank to deposit those altcoins.
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