BitMex, which is one of the most active Bitcoin trading platforms globally with a turnover of $928 billion dollars to date, is reportedly pulling the plug on many trading accounts in the Canadian province of Quebec and in the United States because of the uncertainty and regulatory restrictions in North America.
Best known for their Bitcoin futures trading–allowing low touch traders to trade on margin, which gives them leverage BitMex also has a cryptocurrency exchange on which traders are able to deposit Bitcoin to buy and sell other cryptocurrencies on the exchange. This exchange and derivatives platform for trading is based out of Hong Kong and is currently not under any regulations from any jurisdiction. However, despite not being regulated, BitMex has been operating legally in many countries outside of the United States, which has a complex legal framework in place.
US traders were technically restricted from the platform, but many users in the US were getting around this restriction using a VPN to re-route their location to another country. Moving forward, it’s likely that this workaround will no longer be effective for traders in the US and other banned areas.
Trading accounts now being shuttered
While BitMex was successfully operating in North America, increasing regulatory restrictions have forced the firm to begin terminating all known accounts based in the US and accounts out of Quebec. As reported by the South China Post, this development came on the heels of BitMex notifying users in the restricted jurisdictions of Sevastopol in the Crimea, the Sudan, Cuba, Iran, Syria and North Korea that they should not hold positions or trade on the platform in late 2018. Like their US counterparts, users in these jurisdictions may also have been using VPNs to get around the ban.
Although BitMex is now cracking down on trading accounts in the US because they are prohibited from operating in that country, they believe they are legally allowed to offer their services in Canada. However, Autorité des Marchés Financiers, a regulatory body in Canada that is responsible for Quebec, issued a statement saying that because BitMex is not registered with the body, it cannot legally operate in Quebec and has informed the firm of the situation. In response to the move, BitMex is shutting down all accounts in Quebec but will remain operational in the rest of Canada for now, pending any other moves by regulatory bodies there.
Unregulated cryptocurrency platforms and exchanges’ future is unclear
Whether a person is an experienced high touch or low touch trader or new to the markets in general, the constant shifts in the digital currency market can be disorienting. This latest development with BitMex simply highlights how much uncertainly there is when it comes to unregulated platforms and exchanges and their future paths. As the landscape of digital currency keeps changing, it’s likely that more unregulated platforms and exchanges and their users will feel the impact of increasing attempts at restriction.