Leo Weese, a Hong Kong-based Bitcoin researcher and analysis, has revealed that IP addresses from New York and Washington are banned on certain Bitcoin exchanges and trading platforms.
Both small-scale and major Bitcoin service providers have censored IP addresses from the two states due to their impractical regulations and policies regarding Bitcoin businesses and Cryptocurrency investment. As of now, Bitfinex, the largest Cryptocurrency exchange in the world by trading volume, Bitmex, ShapeShift, Kraken, Poloniex, Vaultoro, and Paxful amongst other businesses do not offer services to users based on the two states, as well as North Korea.
Through Please Protect Consumers.org, the abovementioned Bitcoin platforms have clarified that they intend to not operate in the two states until regulations on user surveillance and Anti-Money Laundering (AML) policies are improved in the future.
“ We believe it is reckless and ethically impermissible to extract personal, private information from our users, if such information is not necessary for the service used. Companies which capture this information expose their customers by needlessly storing sensitive data in a central repository, which inevitably becomes a target for hackers and other malicious actors. Even multinational companies and trillion-dollar governments have been unable to build a track record of data security,” read a statement from PleaseProtectConsumers.org.
It is important to provide minimal regulations on user surveillance and data extraction because without regulated platforms, users and investors in the states of Washington and New York will inevitably migrate to unregulated over-the-counter (OTC) markets and peer-to-peer platforms, that are more difficult for the government to prevent money laundering, and other criminal financial activities.
As a result of inefficient and impractical regulations, Bitfinex was forced to shut down its entire platform for US customers in October.
“ As indicated in the announcement, we are terminating trading, deposits, and withdrawal functionality for U.S. individual customers by no later than November 9, 2017. U.S. customers are already barred from receiving financing from other users on Bitfinex’s peer-to-peer financing platform. This restriction will remain and, in addition, U.S. individual customers will no longer be able to provide financing on Bitfinex effective November 9, 2017,” the official statement from Bitfinex read.
Previously, the Office of the Comptroller of the Currency within the U.S. Department of Treasury revealed the government’s long-term strategy of introducing a national licensing program for Bitcoin exchanges and Cryptocurrency businesses to provide one unified set of laws. An efficient set of regulations is urgently needed in states that require additional policies for Cryptocurrency businesses to comply with.