Exchanges not accepting mixed BTC, so is BTC no longer fungible?

[electronicash]

I have been reading that many exchanges are using Chainalysis (etc.) to look at transactions, and refusing to exchange BTC (or even accept them).  I also know that BitPay is using such blockchain analysis to NOT accept BTC that looked like they were mixed or otherwise have a "dubious" history.

This looks like it is going to be an issue, probably getting to be a bigger issue into the future.

I am not surprised we are seeing this happening, we will see exchanges rejecting coins which are deemed dubious and coins that are coming through mixers and there will be a time when we are not able to use those coins. We might even see the coins that are dubious might  be confiscated by the authorities and then auctioned off at a later time, in simple terms washing through the legal system.

It is impossible to overcome the legal obstacles and we will be forced to follow what the regulators set out.

do you think we'd be seeing dex going to follow all these regulations that they are also going to be asking KYC?

i remember some dex in the past was already asking kyc too. once this happen the users who wants privacy will have nowhere else to go but just dealing with someone in the forum. bad situation for crypto, the price of BTC didn't even rockets up to beat the ATH and no real adoption still.

[20kevin20]

With this going to happen, what would happen to the mixer business?

They will probably go underground once they get banned almost everywhere. Users will not use them anymore unless they want to hide from something off the grid.. which is usually underground activity.

But anyway, I don't really think too much of this as I don't see any complaints yet regarding this kind of transaction from a user, so there's also a possibility that it could not be implemented in the future.

I have seen a few topics here and there on the forum and it'll become a widespread problem once more exchanges start applying the same thing (or the govs force them to). I am against the ban of them but we all should be aware that our governments never really cared about our privacy so they aren't going to start caring now.

[gentlemand]

do you think we'd be seeing dex going to follow all these regulations that they are also going to be asking KYC?

i remember some dex in the past was already asking kyc too. once this happen the users who wants privacy will have nowhere else to go but just dealing with someone in the forum. bad situation for crypto, the price of BTC didn't even rockets up to beat the ATH and no real adoption still.

Then that's not a dex, that's a non custodial exchange.

Aside from Bisq, which has its issues too, I can't think of anything I'd call a dex but it's not an area I study.

The problem with them is that they'll become the guaranteed first port of call for anyone with questionable coins. If they're robust enough and liquid enough people may not bother attempting to mix or obfuscate questionable coins. They'll go straight there and hand the can straight to you. I can't imagine any dex bothering to question the origin of coins. It's your problem. And exchanges getting twitchier will drive that harder.

I seem to remember that happening to someone who exchanged Monero for some stolen BTC via a system like that.

[amishmanish]

Binance SG operates under the requirements as set forth by MAS and our MAS regulated partner, Xfers. Hence there are AML CFT controls set in place for the Binance SG.

i haven't heard of any similar cases at huobi or kucoin. i've also never seen any specific MAS rules that refer to mixing, coinjoins, or anything like that. none of those things were mentioned in singapore's new AML law passed last year.

So Binance is being the tip of the spear for crypto's eventual disconnect from any sort of mixing services. At least the publicly regulated part of it. This won't change the fact that mixing/ obscuring is a major requirement for people with a lot of bitcoin. From an outsiders' perspective, I would say that volume and liquidity needs make these bigger exchanges the only source of fiat for those holders. (Are there any others?? Like some secret OTC services on darknet, no questions asked??)

Blacklisting mixers has another benefit for bigger exchanges. They will have a business opportunity to provide the typical "Swiss bank" equivalent service to its rich customers. You only talk to the banker and the banker talks to nobody. CZ is a clever businessman. He was the first one to see the huge opportunity in giving a platform of legitimacy to Alt-coins. Alt-trading wouldn't be where it is today if not for the marketing and support given by binance.

[thesmallgod]

Majority of people that used mixed services for their bitcoin have potential of acquiring the BTC through shady means. You do not expect exchange platform to be queried or payed badly from something they do not know anything about. Many of this exchanges are operating and obey the government policy in country in which their business is. If they mistakenly taking mixed BTC from trader that stole public funds, What do you think will happen to them ?. The fall of e-currency such as Liberty reserve should remind you what government is capable of doing.

[Jet Cash]

As long as the miners continue to accept such transactions, Bitcoin will remain fungible in my opinion.

[hongchao123]

Mixers was important part of btc history and now exchanges want to stop that. Not so good for network privacy. Thats why im a big fan of monero

[posi]

Blacklisting mixers has another benefit for bigger exchanges. They will have a business opportunity to provide the typical "Swiss bank" equivalent service to its rich customers. You only talk to the banker and the banker talks to nobody. CZ is a clever businessman. He was the first one to see the huge opportunity in giving a platform of legitimacy to Alt-coins.

This was not about blacklisting tumbler site but the mentioned exchange site actually want to build trust between them and the governments/institution and also make it easy to spot a crypto scammer. However, i believe some crypto to crypto exchange site won't use the blockchain analysis and aside there are various ways of making transaction not to look suspicious.

Alt-trading wouldn't be where it is today if not for the marketing and support given by binance.

Youre Binance those make a huge impact in crypto exchange scheme but according to CZ every team of his exchange work independently thats every idea the core team did it was from the core team thinking not is. With that been said, if Binance dont make the change happen sooner or later another exchange site will come up with something.

[suzanne5223]

...

I have been reading that many exchanges are using Chainalysis (etc.) to look at transactions, and refusing to exchange BTC (or even accept them).  I also know that BitPay is using such blockchain analysis to NOT accept BTC that looked like they were mixed or otherwise have a "dubious" history.

This looks like it is going to be an issue, probably getting to be a bigger issue into the future.

If we define "fungible" as satoshis = satoshis, then it looks like that some satoshis are more equal than others.  Does this mean that Bitcoin is no longer fungible?  

This looks like a problem for BTC and possibly all of crypto, in that crypto NOW has / will have to be "proven" clean, else hard to exchange for fiat, other crypto, or even for large purchases?

Please discuss.

Bitpay was not the only crypto exchange site that used blockchain analysis to verified the healthy level of a transaction because Bitstamp, Korbit etc are also among the exchange that use the service. However, i think this will make government to trust that terrorists, dubious people etc are not using crypto and don't see that as something that will by any chance cause some serious problem for bitcoin and others cryptocurrencies if community still support crypto and the miners continue to mine.