Service Changes for U.S. Customers
bitfinex.com
bitfinex.com
Although the intentions of many US cryptocurrency regulations are to protect US residents/investors, they are instead leading to the exclusion of US residents from everything cryptocurrency-related.
No one wants to touch US residents when cryptocurrencies are involved. Exchanges turn you down. ICOs tell you that you are not allowed to participate or outright block you. Gambling websites don't want to touch you either, of course. Neither do derivatives platforms, some sites with margin trading, and many sites with other types of speculation, such as sports betting, prediction markets, etc.
It's easier to just exclude US residents instead of dedicating significant time and resources in trying to comply with new regulations that don't fit new technology as well as they should.
And this goes even further, for example due to US patent laws, and export regulations (encryption are weapons of war, etc) even lots of open source software is not directly legal in the US (and many projects outright ban US citizen from working on these, while living in the US - this is also why the OpenBSD hackatons originally were a thing[1]).
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Do you know of any projects that don't allow US citizens to contribute?
Other projects that do stuff that would be illegal under US patent law (including some of my own) do the same today.
Even other projects that use the EU law that allows decompilation, but which would be illegal in the US, do the same.
But OpenBSD's hackathons are the only project that I want to specifically name. See the footnote 1 in my original comment.
The reason for hackathons in Canada are the US crypto export restrictions. You can't export stronger than 128 bit crypto out of the US today without a permit (and even then only to a few countries, which is why many libraries including the Java stdlib only ship with 128-bit crypto by default, and you need to sign a form with the US DoD to unlock 256-bit crypto in Java).
Back in the day it was worse, the limit was at 56-bit, which was easily cracked, and so some countries such as South Korea invented their own crypto (which they implemented as plugin for Netscape and IE5, and which is the reason IE is still used there today), and in yet other situations people simply wrote crypto code outside the US.
In the end, people printed out the algorithms and source code for an RSA implementation, shipped that book to Europe, and typed it back into a computer. This quickly enabled people outside the US to get access to strong cryptography, and soon the crypto regulations became less strict.
https://en.wikipedia.org/wiki/Export_of_cryptography_from_th...
Even today if you have a product, app, program, etc that includes cryptography (even using HTTPS counts) and that is at some point exported from the US to other countries, you need a permit from the US DoD. For example, if you have an app on the Apple AppStore that is sold outside the US.
I didn't sign any form.
But a while ago, you still had to fill out DoD forms for this. (You still have to do that for other kinds of software, though, Xilinx ISE is a common example of software that requires filling out 5-6 DoD forms)
It's less about the taxation per se, which has been true for decades but not generally dissuaded foreign banks. The big thing that makes banking Americans annoying is FATCA compliance: https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance...
FATCA levels a highly, highly asymmetric weapon against Americans who desire to bank abroad: if the bank is unwilling to pay a $X ~ $Y0 million dollars in compliance costs and technology changes (amortized over all of its customers), they will lose access to USD clearing. That's an unacceptable outcome for most banks, even banks that one does not generally think of as being heavily exposed to America.
Thus my recommendation for Americans living abroad: if you want to get an account with the least hassle, you either want the most gigantic bank you can think of in your country (which can absorb the compliance costs over their thousands of US customers because, hey, your expat population does have to bank somewhere).
Coinbase, Gemini, Kraken...
The US gov has actually been very progressive with regard to crypto. But if you're dealing in USD and doing bank wire transfers on behalf of USA citizens they require compliance with KYC/AML laws. This is apparently something Bitfinex didn't have the capacity to comply with.
But if you want to do much more than that, things get pretty difficult if you're trying to be 100% compliant with known regulations and laws. Especially if you are crazy enough to consider the way things are supposed to be taxed when dealing with many cryptocurrencies, tokens, microtransactions, chain splits, air drops, and many other unconventional new mechanisms.
"Although we strive to provide continuous access to Coinbase services, we regret to inform you that Coinbase is indefinitely suspending services in Hawaii. The Hawaii Division of Financial Institutions has recently communicated regulatory policies which will render continued Coinbase operations in Hawaii impractical. We understand this suspension will inconvenience our Hawaii customers and we apologize that we cannot currently project if or when our services may be restored.”
http://www.hawaiiweblog.com/2017/02/27/coinbase-pulls-out-of...
Anyway, it's not the end of the world for personally. Just a hassle. And I do not have time to "take it up with Hawaii". Maybe some day.
It's not only cryptocurrencies. As soon as you're taxable in the United States it's pretty much impossible to get a brokerage account at most European brokers (I don't know about other regions). Unfortunately "just use a US based broker then" doesn't work as answer if you're a non-resident US citizen, as lots of US brokerage companies close accounts of non-residents.
At this point you're pretty much a customer that no-one wants to deal with.
Crypto assets cause nation states to hit themselves in the face. It's crypto judo.
FATCA comes to mind. Incredibly short sighted law that was designed for foreign countries to comply with US code (just reporting back to homeland). But it grew out of proportion so much that upon cost analysis HSBC decided it will be easier just ban new customers and eject current us-citizens than actually keep army of accountants to make sure they comply. Other banks followed it shortly after. The result - us citizens are pretty much unwelcome and almost impossible to setup a business account in most China land.
Congratulation Senator Levin, Baucus and Rangel with providing sourceless numbers of $100B USD lost due to outside non-taxation and writing this butchered law. Good job ruining US citizens ability to invest and/or run businesses outside so much already competitive US.
The spoofy and Tether thing does lead to some suspicious stuff as well
[1]: https://www.bloomberg.com/view/articles/2017-08-02/bitcoin-e...
[2]: https://hackernoon.com/meet-spoofy-how-a-single-entity-domin...
I've posted this before:
Go to "shenanigans section": http://parasec.net/transmission/order-book-visualisation/
Code is available here: https://github.com/phil8192/ob-analytics, just in case someone decides to grab a good chunk of tick-by-tick data (orderbook) and wants to go down the rabbit hole...
This simply couldn't be further from the truth.
For all we know Bitfinex is just a few guys in an open layout office in Toronto running their Node.js "exchange" on Linode.