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Crypto trading platform Bancor has announced that US citizens, domiciliaries and users from IPs in the United States can no longer make use of Bancor’s web application for token conversion, starting July 8th. Bancor cites a lack of clarity from regulators as the main reason behind this decision, in a blog post dated June 18th.
“This decision has been made in light of increased regulatory uncertainty; at this time, we believe this is the most judicious decision for all the members of our ecosystem”, read the blog post, while claiming that this step would allow the Bancor crypto ecosystem to innovate quickly, and with much more clarity.
What Does This Mean for Crypto Users?
Clarifying the effect this has on Bancor cryptocurrency wallet holders, the official blog post has made the following points quite clear:
- US Citizens, domiciliaries and US IP users alone will be affected. This includes those based in the United States, as well as those not based in the US, but hold US residency or citizenship.
- Users in territories that are not restricted will not experience any changes.
- Bancor Wallet holders will still be able to perform withdrawals, token holding and transfer related activities with their tokens to outside of the US. Only the conversion functionality will be disabled.
- This functionality will be blocked to users who access the bancor.network website, an interface to the blockchain activity. Access to the blockchain itself cannot be restricted, as the Bancor Liquidity Network is a noncustodial system, operating with a collection of smart contracts placed on the blockchain.
This simply means that cryptocurrency traders will lose the ability to swap the digital coins, but they can still move coins on and off of the DEX platform without any hassle. Traders in other locations can go about without any restrictions.
Bancor is Not Alone in Banning Crypto Trading in the US
This move is not entirely the first of its kind, as many crypto exchanges have revoked a lot of functionality from US traders. Binance announced a similar decision on June 14th, restricting services to US-based users and groups, following an announcement that a separate, fully regulated platform is being made for the US market alone.
Bittrex and Poloniex have already cut the number of tokens and virtual coins available for trade. Even smaller cryptocurrency exchanges like Gate.io have restricted a series of markets for traders in the United States. DEX’s Ether Delta’s founder, meanwhile, was charged with operating an unregistered crypto exchange.
Regulatory Concerns Are Widespread in the Crypto Market
This move comes in the middle of stringent ID requirements, among other recommendations due to be published this week, from the Financial Action Task Force (FATF), along with regulatory bodies placing impossible restrictions on digital assets.
While there have been speculations of various kinds, it is almost unanimously agreed that the US regulatory environment would require elaborate registrations, maybe even broker/dealer and ATS requirements. While many DEX providers plan on arguing that publishing open source code does not make them proprietors, it is not likely to stand.
Tough Times Ahead for Crypto Exchanges and Platforms
With unclear regulator requirements, firms have to navigate through murky waters to offer decentralized financial services. The FATF’s new policies affect operations in almost 200 countries, covering crypto exchanges, custody platforms and hedge funds, and it is not surprising that most firms are wary about the future. Large scale data collection, one of the requirements of the newly framed regulatory framework, beats the whole purpose of cryptocurrency, and assimilating this data is no mean feat.
This might be indications to tough times ahead for cryptocurrency exchanges and platforms, which have to comply with the new frameworks if they aim to stay in business.