A while back, we discussed if crypto trading bots are legit or a scam, and now we are back to discussing about them again. Using trading bots can be a great help for any crypto investor, whether he is a layman or a pro. Naturally, given the convenience factor associated with these trading bots, people tend to choose them quite often, to get their trading activities started. But are crypto trading bots legal?
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Today, we will explore the legality of crypto trading bots so that you can make sure you are always on the right side of the law. The crypto space is anyway not quite clear on laws and regulations about most things so it is best to make sure what you are doing will not get you into trouble. But first, a quick recap:
What Are Crypto Trading Bots?
Crypto trading bots are hinged upon the use of a software to communicate with cryptocurrency exchanges via an Application Processing Interface or API.
Based on what indicators you want your bot to track, your trading bot will study the spread across exchanges, changes in the prices of cryptocurrencies, shifts in important statistics such as crypto volume.
Having amassed all this information and analysed it as well, the bot will then place buy and sell orders on your behalf, to meet your investment goals appropriately and adequately.
Now the market is flooded with a large number of trading bots, so whether yours will work well enough or not will depend on whether you have a picked a good bot for yourself and inputted the correct indicators.
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Legality of Crypto Trading Bots
Crypto trading bots are commonly used in both traditional stock markets as well as the crypto trading scene. In the traditional financial system, the stock market happens to have a more elaborate scheme of legality involved. There, certain restrictions exist as to who can use trading bots and how.
However, in the crypto market, such restrictions do not exist and one can easily work with a trading bot of their choice to complement their own due diligence, analysis and investment decisions.
There are a lot of different crypto trading bots to choose from and as long as you choose a smart one that fits your needs as well as your budget, you are good to go.
Having said that, getting a crypto trading bot in no way absolves you of any wrongdoing that the bot may be involved in. Your bot is only as good as how you program it and if you program it to act unethically and illegally, it is likely that you will bear the brunt of it soon enough.
Your trading bot is like a driver but that does not mean that you can give it a free rein. You still remain responsible for your bot’s trading practices.
Therefore, creating or using a spoof bot or a pump and dump bot will always remain s strict no-no. As long as you keep that in mind, your bot usage should not get you into any trouble legally.
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