Opinion: What prompted Poloniex suddenly to abandon margin trading
On the eve of one of the oldest cryptocurrency exchanges on the market, Poloniex, has announced the waiver of the loans to margin traders via the function of the Lending and trading with leverage. The changes will affect only users in the United States. About the possible causes of this step writes the author of the website News BTC Joseph young.
Team Poloniex October 3 said:
By the end of the year we intend to abandon our clients in the United States of services, such as loans to margin traders via the function of the Lending and trading with leverage. This is due to our unwavering determination to ensure that the activities Poloniex regulatory requirements in any jurisdiction. What factors are behind the decision Poloniex?
Before in 2014 earned BitMEX, the most popular cryptocurrency exchange that provided the possibility of margin trading, was Poloniex.
She started work in January 2014 and attracted traders featuring multiple digital assets.
However, the exchange could not cope with a massive stream of requests to support. This situation eventually led to the fact that the company Circle, for which there is a large investment Bank Goldman Sachs, has acquired Poloniex for $400 million.
This week, Circle announced that it intends to improve the operations of the stock exchange on indicators such as security, compliance and efficiency. Towards this end, the company decided to ban margin trading certain categories of users and to delist several tokens.
In particular, the team members Circle said:
As the next step aimed to bring the work of the exchange Poloniex to a high professional level, we carry out delisting of several assets and refuse loans to margin traders via the function of the Lending and trading with leverage. These restrictions will affect only U.S. users.
It is reasonable to ask why we are talking only about Americans? The reason may lie in the fact that recently the Commission on securities and exchange Commission (SEC) and the Federal Bureau of investigation has closed popular cryptocurrency exchange 1Broker for “illegal distribution of securities.” This episode prompted the exchanges operating in the United States to be more cautious in working with local clients.
The fact that 1Broker closed such agencies as the SEC and FBI, has led the cryptocurrency community in confusion, because 1Broker technically has nothing to do with US. The exchange was in the Marshall Islands, and the work with investors in the U.S. market can’t be called the main activity.
To avoid similar conflict with authorities, cryptocurrency exchanges began with great zeal to observe the laws about identifying customers and combating money laundering.
Some users welcomed the move Circle, because it will allow the exchange to strengthen its position in the U.S. market as one of the trading platforms, which is in full compliance with legal norms.
However, the reaction of many customers to delisting and waiver of margin trading were negative. For example, one user wrote:
Buy Circle Poloniex have not had the desired effect. Earlier exchange has become universally apply the rule of “know your customer” and half the users left. Then, when she was subjected to delisting, more than 30% of the coins, she turned away again, users. And now the exchange will cancel services for margin trading.
Users concerned about the fact that Poloniex abandons the original claims for the role of the exchange supports a wide range of cryptocurrency tokens, and can play in competition with Coinbase and Gemini.