BitMEX, the cryptocurrency derivatives exchange announced that it will start the user identity verification program at 0:00 UTC on Aug 28, 2020, requiring all users to complete their identity verification within the next 6 months, that is, before February 2021.
The entire user verification process will require individual users to go through a four-step process, similar to the identity verification process of other platforms. It also requires uploading a photo ID and address proof, selfie, and answering some questions about the source of funds and transaction experience.
Is this a big short for the Bitcoin Market?
This could be a negative news for the bitcoin market. As the world’s top crypto derivatives trading platform, requiring a KYC might affect the efficiency of the business and even impact on the overall industry because it leverages the limitations of entry to the crypto market and may impact the market volume.
However, this news should be treated reasonably and should not scare traders away or alter all their judgements and decisions.
It is all expected
In March of this year, there was news that BitMEX will immediately start a user authentication program. This news has not attracted excessive attention, and nearly half a year has passed, and market participants have already had psychological expectations for identity verification. Therefore, it will not have a great impact on the psychological level of traders.
Embracing regulation is the general trend of the industry
In fact, looking at it now, BitMEX accesses the KYC system and accepts supervision is the general trend. In the Spot trading platform, KYC system access is almost a standard configuration of every large exchange, and through these identity information, it is actively cooperating with governments of various countries to crack down on various economic and financial crimes. At the same time, nearly all large crypto exchanges are actively striving for legal digital currency trading licenses in various countries to maximize legal operations.
As the world's largest digital currency derivatives exchange, BitMEX's access to KYC is completely predictable and is also a trend in the industry. At the same time, as a higher-risk investment platform with futures contract of MAX.100x leverage, we can expect that there will be more stringent policies regarding product design, access mechanisms, and so on.
It's negative in the short term, but positive in the long term
The crypto currency market has always been considered a place outside the law, so it is not difficult for us to imagine that there are a lot of illegal funds in this market. BitMEX, which does not require KYC, and other channels that do not require identity authentication have become very popular channels for these funds to be transferred and legalized. The access of KYC will definitely have an impact on the trading volume of the platform, which will generate a certain negative sentiment in the market.
However, from the perspective of the long-term development of the industry, without supervision and legal support, the digital currency market will never be on track. Only when the industry is truly on track will there be more traders and trading institutions entering, and more people will be willing to understand the meaning and value of digital currency and blockchain.