The regulation of crypto has been all the rage as of late. It is undoubtedly a major hot topic these days as more and more countries across the globe are trying to look for different ways of controlling crypto. Some of you might not know this, but the US already has several rules for crypto. However, that is not all as officials plan to bring more rules to the forefront.
All of these regulations are a major reason why cryptocurrency exchanges at the national as well as the state level are not that high. Exchanges based in the United States are required to register themselves and receives money transferring licenses in order to operate.
What’s more, there are a few international exchanges that decided that the paperwork and cost required for this are not worth the effort. However, there are others that offer services not compatible with the laws of the United States. Crypto exchanges encounter a great deal of blocks, especially in the United States. One of the biggest issues is finding out customer requirements.
A large number of authorities show great concern regarding cryptocurrencies being anonymous. One of the biggest concerns is that it could be used for laundering money or financing criminal activities. Because of this, crypto investors living in the U.S have to enter personal information. Some of them even have to offer their photo identification in order to create an account.
Derivatives trading is also a massive reason behind the lack of crypto exchanges present in the United States. For those who don’t know, derivatives are essentially complicated financial instruments that give traders the freedom to bet on a commodity’s expected price in the future. Traders are allowed to even place bets on the prices that are going down.
However, they can also bet on prices that could go up in the future. Cryptocurrency-based derivatives have been gaining a great deal of popularity across the world. That being said, they are not ideal for U.S based retail investors as they don’t get to access them. A large number of crypto exchanges provide derivatives trading, which includes margin and leverage.
Investors can also take advantage of leverage for improving their overall power to buy. Unfortunately though, the United States would not be keen on licensing crypto exchanges offering the option of derivatives trading. The reality of the matter is that crypto investors in the U.S have to come to terms with the fact that rules and regulations will be inevitable. Regulators will keep enforcing new actions as this industry grows, which may not be a bad thing in the grand scheme of things.