BitMEX Review: What are US Traders Missing Out On?

While there are multiple crypto exchanges fulfilling the need for trading, only a tiny minority of these platforms deserve our attention. Bitcoin Mercantile Exchange (BitMEX) is undeniably one of them. From advanced trading options to security requirements, this platform meets criteria that are usually analyzed by savvy investors before they put their precious capital at risk. Unfortunately, US traders are not allowed to create accounts on BitMEX. Let’s see what they are missing out on.

What about BitMEX?

Owned by HDR Global Trading Limited, a company based in the Republic of Seychelles, BitMEX is a cryptocurrency-derivative trading platform. The three co-founders, who originate from the United States, decided to headquarter their organization in this African country with a goal in mind: to benefit from its very low taxes and friendly regulations. In fact, Seychelles does not regulate virtual currencies.

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BitMEX benefits from Seychelles’ corporate-friendly ecosystem. Source of image: Pixabay

BitMEX is quite cheap to use because it does not charge any fees on withdrawals or deposits. Nonetheless, users still need to pay a network fee when they move their BTCs out of the exchange. Note that commissions per trade vary among pairs. They usually range between 0.05% and 0.25%. Bitcoin is the only currency that can be deposited on the platform. Creating a new account can be done very easily. Even though verification is sometimes required from BitMEX’s staff, the vast majority are not asked to authenticate their identity details. However, corporate clients do need to verify identity.

Why BitMEX is so Popular Among Traders

BitMEX’s success story indubitably comes from margin trading because the leverage available on this platform is very impressive. For instance, some future contracts can be leveraged as much as 100 times. However, this platform is not necessarily suitable for newcomers. Indeed, in such conditions, money is either made or lost very quickly.

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BitMEX is popular because it allows traders to use very high leverage. Source of image: Facebook

Seasoned traders can make bets on futures and swaps. As CryptoCoinTrade explains it in its BitMEX review, futures “are agreements on the purchases made in future on predetermined prices at the specific time. These contracts can be physically confirmed or through cash settlements.” The authors add, “Thus, leveraging is quite useful here, as you can borrow a large number of bitcoins and make very high profits from a single order.” On the flip side, swaps are like futures, except that the former have no time limitation and deal with smaller price fluctuations.

Moreover, there are many different types of order on BitMEX, such as limit, market, take-profit, stop limit, trailing stop, hidden, and iceberg.

Why Are the Americans Not on Board?

While there is no official statement explaining why Americans are not allowed to use BitMEX, some rumors led the crypto trading community to believe that the U.S. Securities and Exchange Commission Security (SEC) might have pressured BitMEX to enforce such actions. Last January, the exchange suddenly decided to shut down many accounts held by American nationals and residents of Quebec. Among others, Tone Vays, a well-known analyst and trader, has had his account closed.

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Speculations abound that the SEC would have pressured BitMEX to shut down accounts that belonged to its American users. Source of image: Pexels

Even though the SEC declined to comment on the situation, the financial regulator of Quebec, the Autorité des marchés financiers (AMF), revealed some interesting details. They divulged that they had sent a letter to BitMEX in early 2018 to ask them to stop providing services to people based in this Canadian province. Because the exchange does not comply with KYC/AML regulations, many crypto enthusiasts assumed that US accounts were being closed for the same type of reason.

Having said that, some Americans are using VPNs to keep using this highly-leveraged exchange. This behavior is not recommended because BitMEX can decide to crack down on accounts that do not comply with their terms and conditions at any moment.

Conclusion

If you are looking for a fast-paced exchange, BitMEX is undeniably a platform you need to consider. It provides an excellent service, has very low fees, and offers tight security. As long as you are not American or located in other excluded countries (be sure you check this detail before you register), BitMEX is the perfect place for traders who want to provide as little information as possible about their identity while still benefiting from margin trading options. If you are a beginner, bear in mind that you should start with low leveraged positions.