Crypto is a global phenomenon, and although there are countless ways to access the asset class, the US has certain restrictions put in place to ensure that only quality, trusted crypto exchanges are licensed to operate in the country.
So, what are some of those regulations in place, and are they beneficial to protecting consumers?
There are a number of US regulations put in place to filter the quality of crypto exchanges that are available in the US.
Bank Secrecy Act (BSA)
Most available crypto exchanges in the US are considered money transmitters, which means that they are subject to comply with the Bank Secrecy Act (BSA) laws and regulations, which require certain actions from exchanges:
- Registration with the Financial Crimes Enforcement Network (FinCEN)
- Enforcing an AML/CFT program
- Keeping relevant and appropriate record books
- Submit reports to authorities
Know-Your-Customer (KYC) Requirements
Crypto, by its nature, is anonymous – decentralized finance (DeFi) platforms don’t require any identification information from its users, they simply need to connect a digital wallet to gain full access. Its anonymity obviously raises some red flags from authorities as they worry that crypto can be used for illegal financial activity.
As a result, registered US exchanges must collect know-your-customer (KYC) information from its users so that there are proper user identification measures for the exchanges. KYC information helps exchanges communicate with authorities to prevent bad actors and enforce tax collection from the exchange’s userbase.
With privacy at the core of crypto’s principles, some crypto exchanges don’t want to enforce KYC regulation on its users, but that also means that they can’t operate in the US.
Some crypto exchanges are unavailable in the US because they offer derivatives trading on their platform. Crypto derivatives are becoming an increasingly popular choice among traders, however, due to US regulations, US-based exchanges are not allowed to offer these services to retail investors. However, some derivative trading services are available on exchanges like Kraken, but only to accredited investors – or in other words, large players with at least $10 million.
In addition to the standard regulatory framework for US crypto exchanges, there may be nuanced rules that apply to certain states or cities, so be sure to research exchanges’ laws within local jurisdictions to ensure that it is a safe option.
Available US Crypto Exchanges
Despite the regulations put in place, there are still plenty of quality crypto exchanges operating in the US. Some of the most popular include:
- Binance US
Finding the Right Crypto Exchange
Every crypto exchange offers its own unique benefits and tradeoffs, like lower trading and transfer fees, token selection, additional trading features, and more. To find the right crypto exchange for you, consider what tokens you are wanting to trade and how often you will be trading them. Exchanges with higher fees aren’t as big of a deal for infrequent investors, but the more often you trade, the more those fees can add up.
FTX.com offers some of the lowest trading fees on the market, as well as unique trading features like NFT trading, crypto derivatives, over-the-counter trading, and more. Those in the US who are interested in trading should create an account on https://ftx.us/ to get started!
In addition to supporting its user base with low fees, FTX helps support humanity through effective altruism – the exchange maximizes the amount of good it can bring to the world by contributing 1% of all its trading fees towards investments in humanitarian-focused projects.