Introduction

The majority of the exchanges in a sample of 100 exchanges (52%) such as Coinbase, Binance, and Kraken — have explicitly prohibited users from specific locations.

98 countries, and even states in the United States of America such as the state of New York and Washington, are commonly mentioned across the terms and conditions of these 100 exchanges.

The most restricted locations are generally the following categories of countries:

  1. Sanctioned by the United Nations such as Iran, North Korea, and Syria. 1
  2. Blacklisted by the Financial Action Task Force (FATF), an international institution combatting money laundering and terrorism financing.2
  3. Embargoed by the United States such as Cuba, Sudan and Venezuela 3

That being said, unsurprisingly, Iran and North Korea rank as the most prohibited locations by 40 exchanges respectively, followed by Sudan (37%), Syria (36%) and Yemen (36%).

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The United States is one of the most banned locations by crypto exchanges

The United States figured in this list as well, ranked as the 8th most banned location by 35 exchanges such as Huobi and HitBTC. As some cryptoassets listed by exchanges might end up classified as securities by the SEC, we are suspecting that most of these 35 exchanges have prohibited US customers to protect themselves from offering unlawful general solicitation to non-accredited investors.4

27 crypto exchanges over the past three years fled with users’ funds

The Amun research team discovered that 27 of them either filed for bankruptcy or shut down in the midst of regulatory pressure such as YUNBI which delisted all cryptoassets when the Chinese government banned all ICOs in 2017.5 And in other cases, we witnessed controversial closures where an exchanges’ owners reportedly disappeared with investors’ funds such as Bitsane and QuadrigaCX.6,7

You think it’s too late to get into crypto? The state of the industry today is similar to the Internet in the early 90’s

The state of the crypto market today shares a lot of similarities with the Internet in the early 90’s. This fact indicates that we are still early in the adoption curve of Bitcoin even though the network launched 11 years ago.

Here are the three main aspects in common:

  1. User traction: It is quite challenging to estimate the real number of people using crypto today — but it is reported that 30 million people own cryptoassets. At some point in 1996, 30 million people had access to the Internet around the world. The only difference, which proves we are still in the early phase of this phenomenon, is the crypto market has attracted 0.002% of today’s global population while back in 1996 the number of Internet users represented 0.29% of the global population.

  2. Hacks: In 1996, hackers altered the websites of the Department of Justice, the CIA, and the US Air force — and similarly in the crypto world, last year, Binance reported that $40 million were stolen by hackers.

  3. The user experience: In the 90’s, online payment services before Paypal were not user friendly and required special knowledge of data transfer protocols to use them. The experience with crypto exchanges is quite similar today, in fact, market participants are advised to store their cryptoassets in cold storage to prevent any loss from potential hacks which triggers a lot of friction in the process.

Endnotes

  1. https://www.un.org/securitycouncil/content/repertoire/sanctions-and-other-committees
  2. https://en.wikipedia.org/wiki/FATF_blacklist#Current_FATF_blacklist
  3. https://en.wikipedia.org/wiki/United_States_sanctions
  4. https://www.sec.gov/smallbusiness/exemptofferings/rule506c
  5. https://www.coindesk.com/yunbi-bitcoin-exchange-latest-close-china-crackdown
  6. https://cointelegraph.com/news/exit-scam-dublin-based-exchange-bitsane-vanishes-with-users-funds
  7. https://www.coindesk.com/quadrigacx-ceo-set-up-fake-crypto-exchange-accounts-with-customer-funds