Why countries are banned from bitcoin exchanges such as Binance and Bittrex

In recent weeks, various exchanges have announced that they will limit their services to specific countries. Two of the most popular cryptocurrency exchanges in the world, Binance and Bittrex, have announced that they will (have to) exclude around thirty countries.

Great list

The exchanges exclude the following countries: United States, Albania, Bangladesh, Belarus, Burma, Cambodia, the Central African Republic, the Democratic Republic of Congo, North Korea, Croatia, Cuba, Bosnia and Herzegovina, India, Iran, Iraq, Kosovo, Laos, Lebanon, Liberia, Libya, Macedonia, Moldova, Nepal, Qatar, Serbia, Somalia, Sudan, Syria, Venezuela, Yemen and Zimbabwe.

In many cases a country chooses to ban cryptocurrencies for religious, political or economic reasons, but that is not always the case. The exchange sometimes also chooses not to serve certain countries anymore.

United States

The United States is such an example. Many crypto companies are unable to offer services in the US due to constant uncertainty. The Securities and Exchanges Commission (SEC) does not want to give a definitive answer about whether certain cryptocurrency’s are securities. That decision has many consequences. To make it even more difficult, the rules also differ per state.

Exchange Poloniex was forced to remove nine tokens from its platform because the SEC did not give a definitive answer about the applicable regulations. Shortly thereafter, exchange Bancor withdrew from the US. Bancor says they prefer to offer an all-inclusive service and do not want to ban tokens.

The consequences of the FATF

At this year’s G20, the Financial Action Task Force (FATF) was under pressure to improve the crypto regulatory framework. The agency is responsible for the global approach to economic and financial crime and is formed by members of the world’s largest economies.

One of the most important FATF proposals is that exchanges must share customer information when transactions take place. Consider the names, account numbers and addresses of both the sender and the recipient. Almost everyone who works in crypto does not agree with these rules. It is practically difficult to implement and is contrary to privacy and the original principles of cryptocurrency.

Eric Turner, director of crypto research firm Messari, called the new rules “one of the biggest threats to crypto today.”

By the way, countries are not obliged to comply with the FATF rules. But companies from countries that do not comply with these rules can be blocked from doing business with these countries. The regulation is supposed to address the “serious and urgent” threat of terrorist financing with cryptocurrency, although there are hardly any indications that this is a real problem.

There was also a response in the Netherlands. The United Bitcoin Businesses Netherlands (VBNL) wrote a letter together with Privacy First to Minister of Finance Wopke Hoekstra. This letter asks for a workable implementation of the FATF recommendations (pdf).

Not all regulations are necessarily bad

Regulation is and remains one of the most controversial topics in the crypto community.

The crypto world consists in part of libertarians, who envisage a completely unregulated world in which we are all responsible for our own money. But another group believes that regulation is needed to protect consumers against fraud and manipulation.