It breaks my heart to leave my favorite exchange, but all good things must come to an end as Bittrex is wading right into regulated waters.
[Note: This is an op-ed]
Will Bittrex Users Get ‘Poloniex’d’?
Bittrex, you’re such a great exchange as you’ve never given me any real problems. Sure, your withdrawal limits (without ID verification) are small. Yeah, your fees were a bit high. But you’ve always been there for me when I needed you. I even like your new redesign, and I especially enjoyed our night mode together.
Alright, I’ll stop with the lovelorn analogies here and get right to it.
All users should be aware that Bittrex is currently registered in Seattle, Washington, in the United States.
At first, this may not seem like a big issue. However, this is the exact same state where another popular exchange started out: Poloniex. That is, until they got bought by Circle, a Goldman Sachs-backed startup out of Boston, Massachusetts, where Poloniex now resides.
So what’s the big deal?
On Monday, Bitcoinist reported that Poloniex “broke its promises” to users by implementing a new KYC (know-your-customer) policy regardless of whether US dollars were ever involved.
This means that the withdrawal limit for Poloniex for legacy users suddenly became $0, even if you only traded crypto-to-crypto. Therefore, your account can now only be “reactivated” if you provide a government-issued ID. Simply put, your funds are now held hostage.
The exchange started circulating emails to legacy account holders notifying them of the changes, which read:
We are requiring that all legacy Poloniex accounts become verified through the latest version of our verification portal […]. During the process, you’ll be asked to provide a verification photo of yourself as well as a photo of a valid government-issued ID card or passport.
Poloniex also had the audacity to call this new policy “improvements” as legacy users were greeted with this welcome screen upon login:
It’s Not You, It’s Me
Yesterday, Bitcoinist reported that Bittrex, which has also been growing rapidly, has confirmed a deal with a New York-based bank that would allow its customers to buy Bitcoin with US dollars.
The news was largely well-received by the crypto space. Bittrex CEO Bill Shihara declared it a watershed moment, saying:
It’s been a long path. […] It’s not just about banks being able to trust Bittrex. It’s about banks being able to trust crypto in general. And I think it’s really showing that crypto is turning the corner in terms of mainstream acceptance.
This is all fine and well, but one cannot help but ask: if Bittrex wants banks to “trust crypto,” how long before legacy Bittrex users get ‘Poloniex’d’? Will their accounts also be deactivated until a government-issued ID and a photograph are provided?
Even though I’m not a US citizen and never bought or sold for fiat (not even USD Tethers) when trading crypto, I cannot but feel the looming risk for my funds.
Moreover, it has become a mantra for experienced crypto traders not to hold significant amounts on custodial exchanges, not to provide personal information because of hacking risks, and to always control your own keys.
Hence, I believe it’s high-time for me to migrate to the next best thing: Binance.
Why Binance? Well, it quickly became the world’s biggest crypto exchange by volume for good reason. Their withdrawals limits are relatively high. They too support many altcoin trading pairs. Their security is pretty sophisticated with multiple 2FA options, and most importantly, they’re not registered in the US!
In fact, following pressure from regulators, Binance relocated from Hong Kong to the island of Malta, which has welcomed the exchange with open arms and a friendlier regulatory climate.
Welcome to #Malta
@binance. We aim to be the global trailblazers in the regulation of blockchain-based businesses and the jurisdiction of quality and choice for world class fintech companies -JM @SilvioSchembri https://t.co/3qtAQjOpuQ
— Joseph Muscat (@JosephMuscat_JM) March 23, 2018
At the end of the day, this was a personal decision. Admittedly, Bittrex is a great exchange and supports altcoins that many other exchanges don’t. And if you don’t mind providing your personal information in exchange for a better user experience, then, by all means, stay with them.
But I for one value privacy and security above all else, and I believe a little paranoia is healthy in this world of cryptocurrencies where risk, theft, and scams are all too common.
Would you consider moving to an exchange that provides greater privacy for its users? Let us know in the comments below!
Images courtesy of Poloniex, Shutterstock, and Twitter/@JosephMuscat_JM.