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The entire crypto industry is offshore now. Coinbase is a shadow of itself, doing 1/20 of Binance on a good day. All US players are buried under mountains of le

The entire crypto industry is offshore now. Coinbase is a shadow of itself, doing 1/20 of Binance on a good day. All US players are buried under mountains of legal fees while the offshore players continue to gain market share. The only rational move if you have a physical entity is to 1) Ban US customers and 2) incorporate in Cayman, Seychelles, etc. Coinbase talks about “maybe launching futures at 10x leverage” but that takes them millions in legal fees and years of effort to allow this. Meanwhile Binance and FTX have 150x leverage and launching crypto-derivatives on oil, DOW, FTSE, forex, etc. etc. etc. It’s game over for Coinbase, Gemini, all US guys. I don’t blame the US given their heavy regulation focus on financial markets, it’s what regulators in the US do, but it’s simply untenable for crypto industry given it’s a global market and the only restrictions to access are illusions mandated by governments. Telegram made a mistake by taking any US money whatsoever. If they avoided that they would have had much easier time. Blockchain doesn’t care about borders, it’s just math. US is playing a losing game but it’s fine - the software doesn’t care.

risho 7y ago
decentralized, permissionless blockchains don't care about borders. centralized businesses absolutely do. Thinking that they can skirt securities law by saying "blah blah blockchain" is comically stupid. even calling centralized services "blockchain" misses the entire point of it in the first place. centralized icos are not decentralized, not censorship resistant and are not permissionless. the only reason they are doing it on a blockchain instead of a database is either because they are trying to avoid securities regulations or they are trying to sell a buzzword to suckers. if you are centralized "blockchain" does not protect you from regulators coming in and bankrupting your company.
- seibelj 7y ago
  How would the SEC shutdown a Hong Kong exchange that excludes US customers? You don’t understand how jurisdiction works. Bitmex has been operating for 7 years!
  - risho 7y ago
    you should look into btc-e, the russian exchange that was shut down by the united states government. not only was it a russian exchange, he was arrested in greece, neither of which are america, for those not keeping track at home. i agree if the people of telegram want to never step foot on US soil and want to never step foot on the soil of a country that has extridition treaties with the united state, they can feel free to blatantly ignore united states law. good luck with that one. i doubt that will end well for you.
    - Fezzik 7y ago
      BTC-E is alleged to have committed crimes that would bring it/Vinnik under the jurisdiction of the United States. The US did not just waltz in to Greece and arrest a Russian national with no assertion of jurisdiction. It also appears that many other nations agreed that the US has jurisdiction to prosecute him... https://www.justice.gov/usao-ndca/pr/russian-national-and-bitcoin-exchange-charged-21-count-indictment-operating-alleged https://www.justice.gov/usao-ndca/pr/russian-national-and-bi...
      - asdfasgasdgasdg 7y ago
        https://www.natlawreview.com/article/can-sec-bring-enforcement-actions-against-international-schemes https://www.natlawreview.com/article/can-sec-bring-enforceme... > When the conduct outside the United States had a substantial effect in the United States or upon United States citizens. So, as long as you make sure not to affect the US or US citizens, you should be safe from the SEC. However, who knows how broadly this rule will be read. If you don't KYC, you could accidentally affect a US citizen, and I don't see an exception here for that case. (I don't know if this applies to all SEC rules or just 77q(a), but it seems prudent to assume that if you are running afoul of an SEC rule you be very sure that no US citizen uses your services.)
- ykevinator 7y ago
  Regulation is good, not bad.
  - CryptoPunk 7y ago
    Better that people be able to choose between regulatory regimes, by choosing between different private platforms, than have a on-size-fits all regulation imposed on them without their consent. You shouldn't have to leave the US to use a particular exchange.
    - LunaSea 7y ago
      Consent is given through voting rights. That's where the buck stops.
      - CryptoPunk 7y ago
        The majority voting for something doesn't equal consent.
        LunaSea 7y ago
        It does, as by voting you relinquish your rights to have your opinion being taken into account by delegating it to representatives. Which means you consent to the decisions of the majority.
        CryptoPunk 7y ago
        Democratically enacted laws apply whether you cast a vote or not. There is no contractual agreement that you surrender your agency when you decide to vote.
        LunaSea 7y ago
        You don't surrender your agency, but your rights will be the ones determined by the country your are residing in. Not casting a vote is a choice not to vote which is also a form of opinion.
toomuchtodo 7y ago
As long as you as a user step foot in a jurisdiction that cares about a blockchain, you lose. The law doesn't care about your software. Why anyone thought software and math was going to take precedence over nation state authority and power is bewildering. Insert the xkcd about rubber hose encryption here.
- seibelj 7y ago
  How does Binance still operate then? Don’t they break every law in the book?
  - toomuchtodo 7y ago
    Not a tall enough poppy, seems to operate in a way Malta does't mind.
    - seibelj 7y ago
      They aren’t based in Malta! They are the biggest player in the entire industry! Not a tall enough poppy? Did you just google who Binance is?
      - toomuchtodo 7y ago
        At one point they were. Their company was registered at Abacus Business Centre, Level 1 Dun Karm Street, B`kara Bypass Birkirkara, Malta
      - deleted 7y ago
        [deleted]
    - swensel 7y ago
      Clarification that they are not based in Malta from Changpeng Zhao (CEO of Binance): https://twitter.com/cz_binance/status/1230860647086338048 https://twitter.com/cz_binance/status/1230860647086338048
  - ackbar03 7y ago
deleted 7y ago
[deleted]
naveen99 7y ago
I don’t see any derivatives on Dow or oil on binance or ftx yet. But those things have been around before crypto anyway like the weekend dow : https://www.ig.com/en/indices/markets-indices/weekend-wall-street https://www.ig.com/en/indices/markets-indices/weekend-wall-s... Cme just launched options on bitcoin futures. That could bring a lot of trading back to the us over night, once wsb can bet on those options.
maps 7y ago
The key feature of coinbase and gemini is of course that they are following all the regs and are the most trustworthy exchanges out there. The people who want 150x leverage on a shady exchange are not the same customers. I would fathom that they are not even in the 'crypto' space as the history of shady exchanges going belly up (btc-e, cryptsy, bitfinex?) should keep anyone with a half descent memory up at night.
- seibelj 7y ago
  The market is proving that the demand for highly-regulated exchanges is far less than the offshore light-regulation ones. The volumes and liquidity speak for themselves.
  - twomoretime 7y ago
    Well...some of the regulations defeat some of the purposes of using btc. Like tying your identity to what should be a pseudonymous interaction.
  - lend000 7y ago
    This is not true; reported volumes are fraudulent or misleading for some of the exchanges you are describing. Look at the entropy of Binance daily volume compared to legitimate exchanges like Coinbase, Kraken, Gemini, etc. They used to be faking it even worse. Average real volume on legitimate exchanges has actually grown since the 2017 bubble. And comparing real volume against the volume of synthetic instruments like Bitmex's perpetual swap is comparing apples to oranges. There is no fiat currency on those exchanges. There is literally zero real liquidity, simply the mechanics of liquidity that can only be cashed out on a reputable exchange.
    - seibelj2 7y ago
      For whatever reason my original account is rate limited. OTC desks execute trades on Binance / Bitfinex and hedge on Bitmex / Binance Futures. If Binance quotes you [XXX] BTC at $1 mil it will go through 100% of the time. You are out of your mind if you think they are faking vol. Perpetual futures charge the same bips if you go 100x, if you have 0.2% fee the exchange takes $2 at 1x or $200 at 100x, doesn't change the fees. Leverage inflates volumes but absolutely increases their fees (revenue), both from bips but also maintenance. You're on another planet if you think Gemini and Coinbase have anywhere close the revenue of Binance and Bitfinex. Sorry man.
swensel 7y ago
I don't see how this is game over for Coinbase, Gemini, or any other of the US exchanges. Even if international exchanges have higher volume, these US cryptocurrency exchanges likely are not going away.

risho 7y ago

decentralized, permissionless blockchains don't care about borders. centralized businesses absolutely do. Thinking that they can skirt securities law by saying "blah blah blockchain" is comically stupid. even calling centralized services "blockchain" misses the entire point of it in the first place. centralized icos are not decentralized, not censorship resistant and are not permissionless. the only reason they are doing it on a blockchain instead of a database is either because they are trying to avoid securities regulations or they are trying to sell a buzzword to suckers. if you are centralized "blockchain" does not protect you from regulators coming in and bankrupting your company.

seibelj 7y ago
How would the SEC shutdown a Hong Kong exchange that excludes US customers? You don’t understand how jurisdiction works. Bitmex has been operating for 7 years!
- risho 7y ago
  you should look into btc-e, the russian exchange that was shut down by the united states government. not only was it a russian exchange, he was arrested in greece, neither of which are america, for those not keeping track at home. i agree if the people of telegram want to never step foot on US soil and want to never step foot on the soil of a country that has extridition treaties with the united state, they can feel free to blatantly ignore united states law. good luck with that one. i doubt that will end well for you.
  - Fezzik 7y ago
    BTC-E is alleged to have committed crimes that would bring it/Vinnik under the jurisdiction of the United States. The US did not just waltz in to Greece and arrest a Russian national with no assertion of jurisdiction. It also appears that many other nations agreed that the US has jurisdiction to prosecute him... https://www.justice.gov/usao-ndca/pr/russian-national-and-bitcoin-exchange-charged-21-count-indictment-operating-alleged https://www.justice.gov/usao-ndca/pr/russian-national-and-bi...
    - asdfasgasdgasdg 7y ago
      https://www.natlawreview.com/article/can-sec-bring-enforcement-actions-against-international-schemes https://www.natlawreview.com/article/can-sec-bring-enforceme... > When the conduct outside the United States had a substantial effect in the United States or upon United States citizens. So, as long as you make sure not to affect the US or US citizens, you should be safe from the SEC. However, who knows how broadly this rule will be read. If you don't KYC, you could accidentally affect a US citizen, and I don't see an exception here for that case. (I don't know if this applies to all SEC rules or just 77q(a), but it seems prudent to assume that if you are running afoul of an SEC rule you be very sure that no US citizen uses your services.)
ykevinator 7y ago
Regulation is good, not bad.
- CryptoPunk 7y ago
  Better that people be able to choose between regulatory regimes, by choosing between different private platforms, than have a on-size-fits all regulation imposed on them without their consent. You shouldn't have to leave the US to use a particular exchange.
  - LunaSea 7y ago
    Consent is given through voting rights. That's where the buck stops.
    - CryptoPunk 7y ago
      The majority voting for something doesn't equal consent.
      - LunaSea 7y ago
        It does, as by voting you relinquish your rights to have your opinion being taken into account by delegating it to representatives. Which means you consent to the decisions of the majority.
        CryptoPunk 7y ago
        Democratically enacted laws apply whether you cast a vote or not. There is no contractual agreement that you surrender your agency when you decide to vote.
        LunaSea 7y ago
        You don't surrender your agency, but your rights will be the ones determined by the country your are residing in. Not casting a vote is a choice not to vote which is also a form of opinion.

toomuchtodo 7y ago

As long as you as a user step foot in a jurisdiction that cares about a blockchain, you lose. The law doesn't care about your software. Why anyone thought software and math was going to take precedence over nation state authority and power is bewildering. Insert the xkcd about rubber hose encryption here.

seibelj 7y ago
How does Binance still operate then? Don’t they break every law in the book?
- toomuchtodo 7y ago
  Not a tall enough poppy, seems to operate in a way Malta does't mind.
  - seibelj 7y ago
    They aren’t based in Malta! They are the biggest player in the entire industry! Not a tall enough poppy? Did you just google who Binance is?
    - toomuchtodo 7y ago
      At one point they were. Their company was registered at Abacus Business Centre, Level 1 Dun Karm Street, B`kara Bypass Birkirkara, Malta
    - deleted 7y ago
      [deleted]
  - swensel 7y ago
    Clarification that they are not based in Malta from Changpeng Zhao (CEO of Binance): https://twitter.com/cz_binance/status/1230860647086338048 https://twitter.com/cz_binance/status/1230860647086338048
- ackbar03 7y ago

deleted 7y ago

[deleted]

naveen99 7y ago

I don’t see any derivatives on Dow or oil on binance or ftx yet. But those things have been around before crypto anyway like the weekend dow : https://www.ig.com/en/indices/markets-indices/weekend-wall-street https://www.ig.com/en/indices/markets-indices/weekend-wall-s... Cme just launched options on bitcoin futures. That could bring a lot of trading back to the us over night, once wsb can bet on those options.

maps 7y ago

The key feature of coinbase and gemini is of course that they are following all the regs and are the most trustworthy exchanges out there. The people who want 150x leverage on a shady exchange are not the same customers. I would fathom that they are not even in the 'crypto' space as the history of shady exchanges going belly up (btc-e, cryptsy, bitfinex?) should keep anyone with a half descent memory up at night.

seibelj 7y ago
The market is proving that the demand for highly-regulated exchanges is far less than the offshore light-regulation ones. The volumes and liquidity speak for themselves.
- twomoretime 7y ago
  Well...some of the regulations defeat some of the purposes of using btc. Like tying your identity to what should be a pseudonymous interaction.
- lend000 7y ago
  This is not true; reported volumes are fraudulent or misleading for some of the exchanges you are describing. Look at the entropy of Binance daily volume compared to legitimate exchanges like Coinbase, Kraken, Gemini, etc. They used to be faking it even worse. Average real volume on legitimate exchanges has actually grown since the 2017 bubble. And comparing real volume against the volume of synthetic instruments like Bitmex's perpetual swap is comparing apples to oranges. There is no fiat currency on those exchanges. There is literally zero real liquidity, simply the mechanics of liquidity that can only be cashed out on a reputable exchange.
  - seibelj2 7y ago
    For whatever reason my original account is rate limited. OTC desks execute trades on Binance / Bitfinex and hedge on Bitmex / Binance Futures. If Binance quotes you [XXX] BTC at $1 mil it will go through 100% of the time. You are out of your mind if you think they are faking vol. Perpetual futures charge the same bips if you go 100x, if you have 0.2% fee the exchange takes $2 at 1x or $200 at 100x, doesn't change the fees. Leverage inflates volumes but absolutely increases their fees (revenue), both from bips but also maintenance. You're on another planet if you think Gemini and Coinbase have anywhere close the revenue of Binance and Bitfinex. Sorry man.

swensel 7y ago

I don't see how this is game over for Coinbase, Gemini, or any other of the US exchanges. Even if international exchanges have higher volume, these US cryptocurrency exchanges likely are not going away.