Bitcoin futures exchange BitMEX has started issuing warnings and popups for users with addresses originating from the US and the Canadian province of Quebec regarding the prohibitive laws and regulations put in place in both the regions which prevent the company from allowing users residing in the regions to hold positions or contracts with them.
The company, based out of Hong Kong, explained that they changed their strategy after many of the regulators across the world started cracking down on unlicensed cryptocurrency exchanges. However, BitMEX also confirmed that the ban has existed on all trading activities in the US since 2015 and the company has been “proactively” closing accounts since it received guidance from the Commodities and Futures Trading Commission (CFTC) of the USA.
In addition to the two aforementioned regions, the company has also terminated services for its users in Cuba, North Korea, Sudan, Syria, Iran, and Sevastopol in the Crimea and has notified its users to stop trading or holding positions on its trading platform, as the local regulations prohibit the company from allowing residents of said regions to hold positions or enter into contracts.
According to a statement made to BTCWires on the subject, an employee of BitMEX stated that although the bans have been in place for quite some time now, the latest change made by the company has been “the use of warning banners and pop-ups to inform all potential new users of the procedures.”
The decision to stop trading in Quebec came right after the company received a letter from the Autorité des Marchés Financiers (AMF) stating that BitMEX was not permitted to trade in the region and was ordered to shut down all its trading accounts in the region. The AMF is Quebec’s financial regulator.
BitMEX cited its Terms of Service, which says that the company will retain their rights to close down any accounts and to liquidate any open positions if the information regarding the user’s location provided by them turns out to be ‘falsely represented’.
AMF’s Director of Media Relations confirmed that they had ordered BitMEX to close all trading accounts linked to addresses in the region as the exchange’s activities were “illegal” in the region. However, the United States Securities and Exchange Commission (SEC) has remained tight-lipped on the issue and its officials have declined to comment on the matter.
It is not known whether BitMEX is registered with the SEC. Reports suggest that although the exchange’s bulk market thrives in Asia, the US was the other major market where the platform had gained traction in recent years. After the cryptocurrency bear market of 2018, many traders moved to trade Bitcoin futures contracts to protect themselves from the market plunges.
BitMEX’s most popular product as of yet has been its perpetual Bitcoin/US Dollar contract that offers 100 times leverage. The system lets traders use small amounts to place big directional bets on a large variety of currencies.
The US was one of BitMEX’s most important user bases, as it constituted almost one-seventh of the total users for the exchange. Despite the lack of resources available to measure the impact of the closure on the exchange, it can be noted that the closure comes at a time when trading volumes have been in a downward spiral.
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