What are the problemes of crypto currency exchanges?

[OmegaStarScream]

Unless there is a good KYC implementation, fully decentralized exchanges should and will never be allowed by governments due to AML reasons.

If done right, that shouldn't be a problem. Take Bisq as an example... no coins held by the developers, users have full control over private keys, no company headquarters, fully P2P and decentralized (no one in charge) and personally, in this case, I don't see how the government could pressure them to enforce KYC/AML.

[o_e_l_e_o]

Idex is potentially a decentralized exchange, but it also has centralized elements which make it something classified as a hybrid exchange.

I would now class IDEX as almost fully centralized. They used to be a hybrid, in that you still had to deposit your coins (albeit to a smart contract rather than a wallet), but you could still do so anonymously and without KYC. Now with their recent implementation of KYC, there are few differences between a fully centralized exchange - you still have to give up your privacy and you still have to give up control of your coins.

Unfortunately, this idea of decentralized is still very new and I am still yet to find a fully decentralized option that is reputable and useable.

As OSS mentioned above, Bisq fits the bill of being open source, entirely peer-to-peer trading, and never touching your coins. I've had a few experiences with using it, and it has (thus far) been smooth and free from any issues. It's biggest issue at the moment is lack of liquidity compared to centralized exchanges, but I'm hoping that changes in the months to come.

Unless there is a good KYC implementation, fully decentralized exchanges should and will never be allowed by governments due to AML reasons.

Governments trying to shut down a DAO would be akin to governments trying to shutdown bitcoin. Its decentralization, by nature, makes it censorship resistance. Bisq have a good document explaining it here: https://docs.bisq.network/user-dao-intro.html

[The Sceptical Chymist]

• If they are attacked and lost the invests to hackers, there are not any legal regulation so you can not ask about your invests to anyone.
• They can stole the invests and can say that hackers has stoled the invests and anybody can not say not 'it was you'. Like Mt, Gox.

These are the main things I worry about with exchanges that aren't regulated by any government.  The reason I trusted Circle and still trust Coinbase (even though I don't use them) not to claim they got hacked and then run away with everything is because of government oversight and regulation.

Exchanges like Yobit?  Who the hell knows what keeps them in business.  They could easily pull a Cryptsy exit scam, and I doubt the Russian government would lift a finger to help anyone--in fact, I'm pretty sure of that.

Thus the biggest issue I have with exchanges is that of their trustworthiness, and every time I use an exchange like Yobit or one of the instant exchanges like Flyp.me, Changelly, and so on, I feel like I'm rolling the dice with my money.  Certainly if the transaction doesn't go right I've got no one to complain to.  It's crazy that 10 years after bitcoin was created we're still in the wild west where exchanges are basically unregulated.

[LeGaulois]

Unless there is a good KYC implementation, fully decentralized exchanges should and will never be allowed by governments due to AML reasons.

You can not expect to trade coins with people that are involved with child pornography, terrorism etc.

But you're using banknotes used by drug dealers previously, it doesn't look annoying to you. Double standard?
The banks have a very strong KYC policy but yet they can't stop money laundering, so what? Oh they even encourage and help individuals and companies to launder money

@OP point on when an exchange is hacked the funds are not guaranteed, as banks do.

Ok, but one of the first things you say about BTC to someone is to tell them that payments are irreversible. It is, therefore, the responsibility of the user. When we say "Be your own bank". There are also the responsibilities that go with it. If someone can't take them on, maybe they shouldn't join the crypto world.