BitMEX is the leading Bitcoin and cryptocurrency derivatives exchange, playing a central role in these nascent markets.

Bitcoin's permanent swap (XBT) is a method that allows traders to use leverage 100 times their capital in exchange for incredible profits or large margin purchases – just a few months ago they reached $ 2K billion in trading. That number has begun to enter the territory of 3K billion dollars, especially considering the recent volatility.

BitMEX's swap has been so important to Bitcoin that one of the reasons the crypto market plummeted on March 12 and 13 (in which BTC fell by more than 50%) was due to liquidation activities. by BitMEX.

Some analysts even argue that if BitMEX does not stop working during times of sharp price drop (currently revealed to be due to a malicious attack), BTC will return $ 0.

Fortunately, the importance of BitMEX to the structure of the entire Bitcoin market has not been noticed by the authorities and critics.

However, the situation changed when a well-known trader revealed that the KYC process could soon be implemented, hampering one of its biggest advantages compared to its competitors: no need for confirmation. identity verification to trade hundreds, thousands or even millions of Bitcoin.

Leading Bitcoin derivatives exchange may soon implement KYC

Bitmex Bitcoin

BitMEX office in Hong Kong

The famous pseudonym on Whalecalls.io, known as “I am Nomad” (hereinafter referred to as Nomad), recently discovered that BitMEX's official company account on LinkedIn (and on AngelList) is recruiting a new position: “AML Executive Manager” for its Hong Kong facility, where the company has leased a luxury office in one of the world's most expensive buildings.

“BitMEX needs home AML management to design KYC packages for general customers. Also hire a java developer with notes about the main system they will work on there”.

Describe The work consists of “two main functions”: developing and managing “customer verification process for institutional retail customers who are onboard or existing on the BitMEX platform. They will be responsible for the customer screening process regarding AML requests and sanctions. ”

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According to Nomad, who has broad industry relationships, individuals are hired to do the job of “designing KYC plans for customers in general,” adding, “we all know it will come to general public”.

The decision of the Bitcoin exchange to switch to the KYC model was made after being criticized by some of the world's largest financial regulators.

Famous, in July last year, Bloomberg revealed that According to “people who know about this issue,” the US Commodity Futures Trading Commission responsible for managing Bitcoin derivatives has begun investigating the exchange.

The news came after Professor Nouriel Roubini of Stern School of Business at New York University and a famous Bitcoin hater criticized BitMEX for “systematic illegal activities”.

Trader will leave BitMEX?

Although there is no detailed information on the intentionally planned KYC procedure for BitMEX that Nomad is referring to, many well-known traders have responded adversely to this move, just like when competitors. of BitMEX added KYC just a few months earlier.

Trader Akado said that once KYC is implemented, “there will be no more reason for people to use the floor.”

“If deploying KYC on Bitmex, there will be no more reason for people to use it. ”

Other celebrities have the same opinion. Romano and Josh Rager respond to BitMEX news, helping to promote other margin trading platforms that do not currently comply with KYC regulations, perhaps because they are within certain jurisdictions and / or have not experienced rage. of financial regulators.

May significantly harm Bitcoin

In parallel with the traders transferring their transactions to the exchange, others believe that implementing KYC will be detrimental to BitMEX, which will have a long-lasting impact on the structure of Bitcoin and cryptocurrency markets.

CryptoDonAlt analyst who had a lot of buy orders during the Bitcoin price plunge commented that “once we (referring to BitMEX traders) have to implement KYC, I don't think alts will do the same”. The reason he stated this view is not fully explained, although it may be related to the altcoin BitMEX derivative tools.

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Moreover, Stack's Bits commented that if BitMEX's business starts to weaken, Bitcoin will be seriously affected:

“For me, one of the biggest things that made me depressed was that a lot of money had left Mex. Maybe that's a market conditiong Or maybe some people already know KYC will come. NhBut the discount scenario is Mex's survival and their insurance fund. ”

In industry jargon, the analyst meant that the slowing down of BitMEX's business could cause the exchange to liquidate a portion of its insurance fund, which is used to prevent damage if market conditions are affected. adversely affects the payment of highly leveraged derivatives, due to less volume and OI on the platform.

Because insurance fund BitMEX holds a sum of about 35,000 BTC – about $ 220 million at the current price of $ 6,243 so selling half of that will have a big impact on Bitcoin's price.

There is no exact data on the damage if selling tens of thousands of BTC on the market, although the narrative that the Ponzi PlusToken program has gradually sold thousands of Bitcoin through exchanges is the main cause of the 50% price drop. in the second half of 2019.

The point related to this story is: BitMEX liquidating more than 10,000 BTC may have other negative effects on Bitcoin price and other cryptocurrencies, especially considering the current liquidity in the market due to the crisis. panic virus Corona?

KYC is not full stop for BitMEX

Stackin's Bits commented on BitMEX's theoretical viability when implementing KYC, suggesting that it is unlikely that the exchange could have anticipated this change in their trading strategy.

The problem is that there is no evidence that KYC implementation will cause the large-scale Bitcoin exchange to go bankrupt. Earlier this year, on January 9, leading trading platform Deribit revealed that it would enforce the KYC protocol due to pressure from the European Union on cryptocurrency companies under the latest anti-money laundering directives. .

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Measures include submitting legal name, address, date of birth and even passport for certain features. Because this is a change from the history of the relatively loose KYC policy, traders are also concerned that the exchange will face difficulties in trading.

But according to statistical, a quick glance at Deribit's permanent BTC exchange volume, neither the publication of KYC rules and the implementation of KYC rules on the platform have had a noticeable impact on market activity.

bitcoin

Bitcoin price

In fact, Deribiti's post-KYC mass data looks similar to data from other exchanges, with volume rising to its highest level in February of $ 10,500, then significantly increasing during the flash crash. out on 12 and 13/3.

However, the floor Bitfinex and Bittrex More stringent implementation of the KYC protocol seems to coincide with a large market share decline.

Anyhow, the two solid exchanges of the cryptocurrency industry are still in operation, giving hope to BitMEX after the implementation of KYC and its volume.

In the event that KYC causes serious damage, it is likely that BitMEX will be inferior to competitors such as FTX, which is partly owned by Binance, causing BitMEX to race for profits or Bitcoin sales.

Thuy Trang

According to Cryptoslate

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