Bitstamp Archives

Bitfinex moves out of Washington State citing regulatory problems

Posted on March 7, 2017 | by [email protected]

Regulations, especially not well thought out might be a hindrance to innovation in any form. Such constricting regulations are hindering the development of fintech companies currently in US. The latest state to join this list is the State of Washington where regulations on digital currency startups have made significant impact on businesses. Owing to these regulations many companies have ceased to serve the residents of the respective region and Washington is no different. The latest to join the list of exchanges pulling out of the state would be the Honk Kong based exchange Bitfinex. After suffering a massive hack in August, Bitfinex has managed to reimburse the stolen money to their clients through redemption tokens and was able to re-establish client’s faith in the exchange. Though the strong reason behind this move is still unclear, let’s look into the details of the exit:

The Regulatory debacle:

A Washington based user has revealed on Reddit that Bitfinex has withdrawn from the State owing to a regulatory debacle which it eventually lost. The statement released by the exchange read as follows:-

“Over the past few months, we have been in discussion with representatives of the Washington State Department of Financial Institutions(DFI) about Bitfinex’s business and specifically to provide Washington customers with service. DFI representatives have made it clear that for offering the services, Bitfinex has to acquire a state money transmitter license.”

Bitfinex’s problem:

The exchange underwent a massive hack attack in August 2016, losing more than $70 Million after which there have been facing consistent trouble. The exchange issued blockchain debt tokens to its users in August as a way to pay them back for losses it incurred in a debilitating hack. The exchange announced that it would purchase the tokens at an above-market value of $1 each. This is roughly double the market value when the redemption took place. The exchange has been good on its promise so far but they have experienced a DDOS attack pretty recently which has been fended off.

Regulations and Bitcoin businesses:

Bitfinex notified that it wouldn’t be obtaining the money transmitter license in Washington and, accordingly, will no longer be doing business with verified Washington customers, effective immediately. Washington-based traders have only until Wednesday to withdraw their funds, Bitfinex added. Earlier last week Coinbase suspended its services for customers in Hawaii owing to authorities intervention. Early December last year, Bitstamp also left Washington State citing regulatory reasons. The problems with regulation for cryptocurrency startups started with BitLicense NewYork which saw the mass exodus of the startups from the state. Whether regulations and business would be able to find a middle ground in US where the innovation would get a push rather than hampering is to be seen.

Bitstamp exits Washington State: Regulation hampering innovation?

Posted on December 7, 2016 | by [email protected]

Tightening regulations are hindering the development of fintech companies currently in US. The latest state to join this list is the State of Washington where regulations on digital currency startups have made significant impact on businesses. Following regulations many companies have ceased to serve the residents of the respective region and Washington is no different. Following the same, Luxembourg-based bitcoin exchange Bitstamp has announced effective 20 December, it will stop serving residents of the state. The exchange operates out of U.K and U.S with good volumes and has been one of the leading exchanges in the market of cryptocurrencies. Though the strong reason behind this move is still unclear, let’s look into the details of the exit:

Regulation in the past:

Most notable step towards regulation took place in 2015 with the introduction of BitLicense in New York. While most people saw it as a ‘necessary evil’, this move saw a huge impact on various bitcoin based businesses. Exchanges like Coinsetter, MonetaGo payed the licensing fee and decided to stay and serve the customers in the area. Many small businesses like Poloneix exchange and GoCoin ceased their operations in New York due to cost and many other factors. Many companies like ShapeShift stopped their operations after seeing that they would have to drive up their service charges.

Washington and Regulatory moves:

In the State of Washington, Nations capital Washington DC has been a very pleasant environment for the development of Bitcoin and Blockchain ecosystem. In September, Coin Center, a Washington D.C.-based non-profit and advocacy center focusing on public policy issues facing bitcoin started a Congressional caucus. The function of the caucus is to study bitcoin and blockchain technology deeply and resolve the issues. It also aims at making policy makers to understand open technologies like bitcoin and ethereum.

Is Bitstamp withdrawing proactively?

Bitstamp has launched the trading of the biggest traditional currency trading pair – Euro/Dollar in June. This marked the entry of the exchange into mainstream trading apart from cryptocurrency trading. After such a move, this move came out to be suspicious. There has been speculations around this that after federal Judge approving IRS summons, Bitstamp is protecting itself. In this recent incident, the Judge has instructed bitcoin wallet and exchange Coinbase to disclose transaction records of bitcoiners. Hence this can be seen as a preemptive move on part of Bitstamp.

The longest running Bitcoin Exchange is now open to USA Bitcoin Traders

Posted on November 16, 2016 | by [email protected]

When two-man team from China launched a Bitcoin exchange in Shangai, they certainly didn’t have US markets on their mind. What launched as a Yuan denominated exchange, in an unregulated environment, is now all set to trade with BTC USD. We are talking about BTC China, currently the longest running Bitcoin exchange. With heavy Chinese involvement, it has been the highest in terms of volume and the oldest in terms of running exchanges. Let’s look into its journey and how BTCC got to US Markets:

The History and the growth:

BTC China was one of three major exchanges started in the summer of 2011. Its contemporaries included Slovenian Bitstamp and the Russian BTC-E. Around that time, MtGox in Japan had the highest volumes in bitcoin market for USD trades. The exchange grew quickly in 2012, despite the close monitoring of Chinese officials. Chinese government and Central bank were starting to enforce threatening steps for the growth of Bitcoin. Despite the negativity, the platform being China’s only exchange for trading Yuan for bitcoins garnered positive press coverage on national television. After the fall of MtGox, the exchange has seen steady increase in volumes which was later pushed up by imposition of capital controls in 2015.

Operating structure:

BTC China has been in business since 2011 building an effective customer relationship. While the company offers services to almost every country in the world, 16 countries are excluded. These include the typical outsiders like Iran, Cuba, and North Korea. Accompanying them are residents in the US states of New Hampshire, North Carolina, and New York. Anyone can sign up with a photo of their passport, a selfie of themselves holding the passport. They would also need a third form of identification that can be a driver’s licenses or utility bill.

Benefits over traditional exchanges:

The exchange’s fee structure might really attractive for US Dollar traders. Buyers pay only 0.2 percent of a trade, with a minimum of one penny. This is on par with Bitfinex and better than Bitstamp’s 0.25 percent. Meanwhile, sellers can earn money on each trade, receiving a rebate of 0.05 percent for adding liquidity to the board. This beats both Bitfinex and Bitstamp which still charge money to sellers.

The new real-time exchange, currently in beta, offers Market, Limit, Stop, and One Cancels the Other (OCO) orders for spot trading. The Pro trading platform also provides 25x margin trading. The company now also offers a few other bitcoin services, including a bitcoin wallet, physical bitcoins, and a bitcoin mining pools. This would certainly make it very lucrative option for all the US based traders.