The Top US Cryptocurrency Exchanges (2022)

The Top US Cryptocurrency Exchanges (2022) Regulation of cryptocurrencies has undergone a significant transformation since the 2009 debut of the Bitcoin blockchain. In 2010, the now-defunct BitcoinMarket.com, the first cryptocurrency exchange, and the now-famous Mt. Gox trading platform both went live.

From a completely uncontrolled "wild west" in which anybody may trade cryptocurrencies without disclosing their identity, the cryptocurrency trading ecosystem has developed into a highly regulated financial sector governed by KYC and AML standards for the majority of major exchanges.

While more regulation has allowed crypto exchanges to provide improved levels of security and dependability, rigorous regulatory restrictions have created a trading ecosystem that is broken, with exchange availability being segmented by country and region. Numerous variables, including dependability, security, history, fee structure, and supported cryptocurrencies, must be carefully considered when choosing from among the hundreds of cryptocurrency exchanges that are currently available online.

Check out our post on the Best Crypto Exchanges if you're looking for a list of the best cryptocurrency exchanges worldwide. The top cryptocurrency exchanges for US-based traders are a little different, so if you're based there, keep reading.

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Why Are There So Few Crypto Exchanges In The United States?

It's all about regulating cryptocurrencies. The rule is a hot topic right now as nations all around the world try to find measures to control the shady cryptocurrency industry. There are already a number of rules in existence in the United States, and more are likely to be added.

Many crypto exchanges are unable to operate in the United States due to the current laws, both at the state and federal levels. Exchanges must get money transfer permits and register as money servicing businesses (MSBs).

Some external exchanges have decided that the expense and administration are not worthwhile. Others offer services that are in violation of American law. The following are some significant roadblocks for bitcoin exchanges in the United States.

1. Know Your Customer (KYC) Requirements Because cryptocurrencies are anonymous, authorities are concerned about them. Its potential use to finance crime or launder money from illegal operations is a source of concern. As a result, in order to create an account, American cryptocurrency investors must fill out their personal information and frequently supply a photo ID. The problem is that the initial idea of cryptocurrencies was privacy and anonymity. Additionally, the lengthy know your customer (KYC) procedures frustrate both customers and exchanges. For instance, exchanges might not want to manually verify photo identification and address proofreading.

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2. Derivatives Trading Using complicated financial contracts called derivatives, traders can wager on the future price of a commodity. Traders have two options: short (bet on the value of the currency falling) or long ( bet on the price going up ). Although cryptocurrency derivatives are growing in global popularity, American individual investors cannot access them.

Trading in derivatives is available on reputable cryptocurrency exchanges, including leverage and gross profit. Leverage is a tool that investors can use to boost their buying power. For instance, if you put down $100 and used a 5x leverage, you might open a position worth $500. There are limitations on this kind of trade because you'd also be taking on a lot more risk. Exchanges that let regular investors trade in derivatives are not allowed in the United States.

Before June 23, Kraken only allowed U.S. customers to trade restricted gross profits, but starting that date, anyone who meets the requirements can utilize this service. (Modify investors must have assets worth greater than $10 million.) Additionally, CoinBase Pro has turned off its margin trading.

The IRS and the Justice Department are looking into Binance, which has a global website and a U.S.-specific website because they think U.S. consumers are using the external website for these kinds of trading.

3. Taxes and Additional Reporting Businesses that provide money services must maintain thorough records and notify the IRS of any cash transactions over $10,000. All bodily processes of clients in U.S.-based transactions with international customers must be monitored. Crypto tax evasion is firmly in the sights of U.S. officials, who think that millions of dollars worth of transactions are going undetected. The IRS has already pursued similar measures against Coinbase and obtained a court order earlier this year to get documents from Kraken. The exchanges must provide information on American taxpayers who have made cryptocurrency transactions worth more than $20,000 in total. The administration wants cryptocurrency transfers to be considered as cash in the future. Any cryptocurrency transaction worth more than $10,000 would need to be disclosed if such suggestions are accepted.

4. State-Specific Rules States have approached the regulation of cryptocurrencies very differently from one another.

Because of this, not all states in the United States have sealed cryptocurrency exchanges operating. Some states, like Wyoming, Colorado, and Ohio, have passed laws that are supportive `of cryptocurrencies in an effort to draw in the growing interest in cryptocurrencies. Others have stringent encryption requirements, such as New York and Washington. The course of crypto legislation has been set by New York. Its BitLicense regulates the currencies that exchanges can trade as well as how they hold money. Many people think that tougher federal regulations will be based on the New York model.

Can unlicensed exchanges still run in the United States?

The fact that cryptocurrency is a worldwide sector and technology makes it simple to access services from all over the world is one of the numerous difficulties in regulating the industry.

As a result, some users in the United States use services that are not MSB-licensed. The United States is actively combating this kind of natural process and will likely step up enforcement in the future. The cryptocurrency exchange BitMEX, which is not authorized in the United States, was penalized by the Commodity Futures Trading Commission (CFTC) at the end of the previous year for letting American users use its upgrade.

Although it may be appealing to break the law and use services that are not accredited by the United States, doing so is dangerous. Authorities are aggressively investigating cases of cryptocurrency tax evasion, exchanges may lock access to customer accounts, and customers won't have the same protections. Investors in cryptocurrencies must recognize that regulation is a given. Regulators won't just turn a blind eye to the industry's growth, even if their actions go against the principles upon which Bitcoin was built. Furthermore, thorough regulation is not always a bad thing. It can shield us from dishonest players and prevent us from unintentionally encouraging detestable behavior.

Endnote I hope our guide helps you to know the best Crypto Exchanges for US Traders. Before investing your money if you're new to cryptocurrencies, it's crucial to consider certain considerations. Cryptocurrency Exchanges have various modes of operation, levels of protection, and user interfaces. Another option is to get in touch with a trustworthy cryptocurrency exchange development company before taking any decision to invest your money into cryptocurrency.