Sat, 25 Sep 2021

WASHINGTON D.C.: Americans have found ways to avoid regulations intended to prevent U.S. customers from accessing overseas cryptocurrency exchanges, according to recently released research.

A report released by the U.S. Commodity Futures Trading Commission said on Friday that hundreds of Americans are bypassing restrtictions to trade crypto derivatives on foreign exchanges, such as FTX and Binance.

The report noted that Americans can easily bypass laws and regulations that were created to block them from trading on offshore exchanges.

The report was written by Inca Digital, a data firm whose technology is used by the CFTC for investigations and market surveillance.

Crypto derivatives allow traders to place bets on whether bitcoin or other digital currencies will increase or decrease in value. While operating outside the United States, exchanges do not abide by CFTC rules, including investor-protection requirements and safeguards against money laundering and market manipulation.

"U.S. customers will likely have little or no protection if they trade with unregistered firms that operate outside the U.S.," the CFTC said in an emailed statement, as quoted by the Wall Street Journal.

Inca reportedly monitored over 2,000 Twitter accounts used by crypto derivatives traders, including 372 belonging to Americans.

Officials believe that those U.S. traders identified by Inca represent a very small portion of the millions of users of offshore crypto exchanges.

The vast majority of American traders were using FTX, whose office is in Hong Kong.

FTX, however, has told the Wall Street Journal that it would work to block U.S. users.

Americans are able to trade on offshore crypto exchanges by using virtual private networks, which hide the country where an internet user is based.

Of note, at FTX the lowest level of trading access did not require documents to prove the identity of traders.

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