Cryptocurrency exchange needs more info than any bank or brokerage firm?

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I wanted to quickly sign up for a cryptocurrency exchange today to act on some info I found out about a low-cost coin (hahahah, quickly. how naïve). In signing up for the account, I got to a step asking me for my SSN, which is pretty normal. But then it asked for high resolution photos of a picture ID AND a proof of residency document??

I have MULTIPLE online bank accounts and brokerage accounts, with tens of thousand of dollars being held and traded in various forms, and I've never had to provide such information. Why the heck is the supposedly "anonymous decentralized currency of the future" requiring me to send in my firstborn and the results of my latest colonoscopy??

WakeDemons3

Posted 2018-02-14T17:44:59.067

Reputation: 103

Answers

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The requirements vary by exchange and are mostly as dictated by the regulating government. Bitcoin itself is decentralised, however, exchanges and businesses operate within government jurisdiction and must comply with any regulatory requirements. The requirements are usually country specific but mostly revolve around anti-money laundering requirements and whatever their standard requirements for investors are.

Willtech

Posted 2018-02-14T17:44:59.067

Reputation: 2 657

Right, which is why I included the fact that I have many US based banking and brokerage accounts that have NEVER asked for such info. So there has to be a better answer than this.WakeDemons3 2018-02-14T17:59:59.627

@WakeDemons3 Bitcoin is also considered an international trade by many governments whereas banking and brokerage is (probably?) just domestic trade. They hold your local regulated currency and trade on the domestic stock market, otherwise, they are probably international and not subject to the regulation of the US.Willtech 2018-02-14T18:02:32.227

You can seamlessly trade international markets on any brokerage account without additional levels of identification or verification.WakeDemons3 2018-02-14T18:05:03.557

@WakeDemons3 I also have challenged one specific US-based cryptocurrency exchange service on this in the past and was told specifically that it is a regulatory requirement - I am not US-based.Willtech 2018-02-14T18:05:51.250

2@WakeDemons3 I would bet that the somewhat uncertain regulatory environment that bitcoin exchanges operate within would incentivize exchange operators to go ‘above and beyond’ the sort of verifications you are used to, in order to more fully cover themselves with respect to KYC/AML regulations.chytrik 2018-02-14T23:09:28.453

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a) It's not anonymous

b) Because governments hate it and are looking for any excuse to close down exchanges that deal in it. So exchanges have to cover their ass in triplicate by asking you for all this personal info.

If you don't want to provide personal info then you can buy in person from individual traders in the over the counter markets. Localbitcoins is the most popular site for arranging such trades.

Another option is a bitcoin ATM although I hear they ask for personal info too nowadays.

Once you have bitcoin you can exchange if for your choice of altcoin.

Abdussamad

Posted 2018-02-14T17:44:59.067

Reputation: 1 850