The entire cryptocurrency universe is on lockdown this month as the exchanges had to surrender to overwhelming demand and shut down new accounts.
Or, you can open a new account, but you can’t fund the account without your account getting verified. When will your account get verified? Nobody knows.
These exchanges are small businesses with normal, over-worked human staff who have been working very hard to get as many accounts open as possible. No one likes to turn away business.
This is a good problem in two ways. One is that there is clearly a huge new market of crypto-investors who want to play. Second is that the exchanges themselves are determined to follow all the rules to increase their legitimacy with both customers and the banking system. I’ll explain more on this below.
I went looking to find you, my readers, an exchange where you still might be able to open an account. Alone among the major exchanges,
Coinbase is accepting new accounts and allowed them to be funded without verification to the tune of $250. Big deal. If you want to increase your limit to $1000, um…prepare to wait to get your account funded.
Yesterday, I thought I would give my readers a nice Christmas present and write up a number of less well-known exchanges
My favourite back-door exchange was CEX.io.
CEO.io is perfect when you absolutely have to buy crypto right away. They have been around for years, well-respected, based in London, UK and allow for funding with credit cards.
They are not heavily used by crypto-veterans as they gouge you with a 10% fee every time you buy a bitcoin or ether.
But when I saw this message, I knew I was in deep trouble:
Nevertheless, I was determined to bring my readership good news of a functioning cryptocurrency exchange so that on Christmas Day, Moms and Dads could give the wonderful gift of Bitcoin to their beloved.
And so onward, I went, filling out forms on sketchy and then even more sketchy exchanges based in countries whose names I only encountered before in geography class.
Failure after failure did not deter me.
That is of course, until Mastercard disabled my credit card.
Then I thought “My readership does not need to buy bitcoin on Christmas day. They will be happy with a nice glass of eggnog.”
Crash, What Crash?
You would never know Bitcoin dropped from $19900 down to just below $12000 this week, a drop of more than 40%, unless you looked at the charts.
I was poking around an Indian peer exchange yesterday while the price was dropping like a rock and found the experience completely mystifying: There were no sellers, just buyers.
Crypto-currency peer exchanges are the lowest of the low (in my opinion). They are basically websites set up as marketplaces where anonymous individuals can buy and sell bitcoin.
Peer-to-peer is about as sketchy as it gets but if you willing to pay the right price, you can ALWAYS get Bitcoin.
But there was no bitcoin for sale.
In India.
On a sketchy peer exchange.
While bitcoin was crashing.
Why Are the Crypto-Exchanges Shutting Their Doors to New Customers?
Bittrex the number nine exchange in the world, had to shut down and upgrade their servers when HALF-A-MILLION users went online at once.
Contrary to what you may have read elsewhere, most crypto-exchanges are very worry about reviews from various financial regulatory bodies and specifically are terrified of being accused of being money-launderers by US policing agencies.
Nothing ruins your day faster than being labelled a money-haven for terrorists and drug-runners.
Therefore most if not all crypto-exchanges comply (or at least try really hard to) with anti-money laundering (AML) and know-your-customer (KYC) legislation.
Well, it’s hard to know your customer when new customers are pouring in at 10.000 day and your support staff wants some time to do Christmas shopping.
Finally, let’s say you let your standards drop and give up on identify verification? Not a good idea.
For YEARS crypto-exchanges have been pariahs of the financial world, meaning they lived from day-to-day in fear of having their bank accounts closed. Now they are THIS close to becoming legitimate businesses and fine upstanding citizens of the financial community.
No way are they going to screw up the paperwork now. The retail guys are just going to have to wait in line for how long it takes.
Conclusion
At this point in the narrative, dear reader, I throw my hands up in the air and say…I don’t know what’s going to happen even in the near term.
All I can offer is this:
1. No new money (or retail money, or very little of THAT) is getting into the crypto-currency ecosystem.
2. Despite the WILD swings of Bitcoin, nobody is panicking (except for the poor guys who got liquidated on the futures exchanges like Bitmex, and there were a lot of those guys).
3. Nobody knows when the exchanges will literally come back online. Sure us verified account holders can trade and have fun but what happened to 2018 being the year Bitcoin going mainstream?
I guess when all of this gets sorted out, the real party will start. Today, we are just warming up.
Merry Christmas
Ross
