Topic: Centralised Exchanges are the Biggest Enemies of Bitcoin (Read 410 times)

Even the founders on these exchanges (Kraken and Coinbase) have admitted as of recent that CEX is really not the way to go when it comes to holding your bitcoin, because the government can give orders to then to lock or freeze people’s accounts and they will have no other option than to do it, since they are working with the government.

So, now is the best time for everyone to start considering wallets that are decentralized, and also peer-to-peer exchanges. Though DEXs are hard to understand at first, but if you take your time to study how it works, you will definitely understand it. Although I will also add that DEXs should work on their platforms and make it better, and easy to use.

its fair to not just sling crap around in some tinfoil nutcase rhetoric, but that requires people doing research and understanding how MSB(exchanges operate) and how regulations work in the real world, to know which arguments to actually make and which ones are just tin foil fantasy

EG
idiots hating exchanges with rhetoric of 'government are spying' is incorrect because its the business that collects analyses and stores customer data not the government. the business only reports to government on specific customers it deems as suspect, and to validate their suspicions they need to collect data to cancel out invalid suspicions by knowing who is a clean customer thus no need to report on all acts done by clean customers. lack of knowing things causes more suspicion... not less

but its also fair to highlight the risks of MSB(exchanges) such as when using an exchange as a custodian. you are not under some government insurance that protects your value. so unlike a institutional bank account, a MSB wont get bailed out and there is no consumer protection of value. yes you can try to form a lawsuit to sue a business privately but that then requires proof and accounting and showing you are indeed a customer of theirs in the first place and then prove the value was not lost due to the customer error.

so highlighting to people its safer to not use a exchange as a custodian(savings account) is better then to not inform people and let them lose their value(mtgox case) where they falsely assumed if an exchange closed people would get a cheque in the mail from some insurance/government department

I don't really get why most people pit central exchanges and bitcoin from one another. Both have their own purposes and functionalities. They serve different markets as well. After all, not everyone is into crypto. Some are contented with the current fiat system and we have no control over that. The central exchangers cater those people who are mostly traditional and conservative in holding their finances. Meanwhile, those into crypto prefer broader and different approaches in handling money. I believe central exchangers really take a good part in promoting crypto and making it widely used in most parts of the world. I agree that central exchangers are of importance to the buying and selling since bitcoin is still isn't fully adopted yet. It offers convenience and ease to those people converting, buying, and selling in CEs platform. Of course, this has its set backs as well such as KYC because we still have to comply to the regulations set by the platform in accordance to what the law demands them. If ever bitcoin would be completely used and adopted in most parts of the world, it would be better for our community. Hopefully, in the near future it will happen before our eyes.

fighting what exactly?
the very fact that its not the government gathering data on every customer and only seeking specific data on suspect criminals when the government receives a report of suspicion, pretty much covers your tin foil concerns of 'government overreach' in regards to privacy against the government.

by the MSB collecting the data and only reporting suspect data, addresses one of your tinfoil concerns

as for fighting to evade the need of collecting any data.
the government concerns are tax avoidance, laundering, criminal funding, and terrorism. and so trying to lobby a campaign to evade all data collection at the business level is like trying to fight "no we wont help fight terrorism, we are not patriots we want criminals in our business' .. see how far that gets them

businesses want to keep making dollar profits. bitcoin is just a product of temporary mechanism to make more fiat profit. and so they will lean to protect the fiat more then protect bitcoin.  especially if they are going to be penalised by $5k a day per violation/customer for every day they dont comply with fiat laws.. thats just not good business.

.. but lets say in your utopian tinfoil world. there was a system. try to explain your system of how you see that businesses operate to :
protect against criminals, terrorists, dictator states
protect users funds from being stolen by MSB

EG the freezing of the bitfinex stolen funds and the funds of the virus/hacker groups.. how would you deal with allowing law enforcement to still find and stop this if businesses didnt look into their customers.

take for instance that if businesses never keep logs of which customer makes a bank deposit. then a customer has no claim if a MSB was to go bankrupt or done a 'we been hacked' because there is no trace of their transaction to account for to validate any class action suit against a business

take for instance if a MSB was not to analyse blockchains for clean taint, every taint would have to be treated as suspect. and if a MSB was not to request income/employment status of customers. how can it tell whats a legitimate 'normal' trade based on that customers level, vs a suspicious trade. EG an unemployed hobbiest would look suspicious if moving over $1k a month. but a rich employed person wouldnt get a second glance if moving $10k
however without KYC everyone would be classed as suspicious for moving just $1k a month, thus without analytics and KYC more people would get reported.

so in your world view of utopia, how would you like laws to be wrote and how would you like MSB to operate and still function without real world risks to themselves and customers funds.

please write examples statements of laws and example business policies of customer accounting.

oh and please do not mis-quote the yellen rhetoric where you think yellen is now allowed to implement any policy she pleases. do some research and learn about MSB and the draft bills and realise the latest draft bill you have been indoctrinated into the tinfoil society is actually a change that helps stop yellen from just making policy at a whim

Now there are already 460 exchanges and exchangers in the world, some of them are centralized, and some are decentralized. Cryptocurrency holders can still choose which exchanges to use, but many of them choose centralized exchanges such as Binance. It is necessary to understand that states will always fight against criminal, "dirty" money, financing of terrorism. In addition, states have the full right to impose a tax on any type of activity that brings profit to citizens. Therefore, they will oblige the exchanges at the place of their registration to provide certain information about their customers. If we want the cryptocurrency to be legalized by states, we will need to agree with this.
On the other hand, centralized exchanges and mandatory KYC increases the security of cryptocurrencies located there. In the event of a hacker attack or other unforeseen circumstances, such users can count on damages.

Here's my issue with it. Yes, they are all independent businesses and so they are all driven by staying in business and maximizing their profits, which of course means that they will comply with whatever various governments tell them they must comply with in order to be allowed to continue to operate. I don't agree with those laws and regulations, and so I don't use centralized exchanges. Other people have different views. That's all fine.

My issue is that these centralized exchanges which making billions of dollars of profit of the backs of the community do absolutely nothing to try to help that community and fight some of these laws and regulations. Government says collect KYC on everyone, they do it without a second thought. Government says to start tracking deposits and withdrawals both forward and backward, not only they do they do it without a second thought, but some of them get so good at invading your privacy that they set up subsidiaries specifically for this purpose and then sell that ability to the likes of the FBI and CIA. Government passes some draconian laws regarding reporting requirements or proof of address ownership, and they are completely silent.

Exchanges should be fighting all of these. Where is the lobbying? Where is some of their billions being spent on political campaigns? There was a recent case in the Netherlands where their biggest centralized exchange Bitonic funded a lawsuit against the government and overturned a privacy invading law which would have mandated every withdrawal address to be KYCed. Why do we not see much larger exchanges like Coinbase or Binance, which make many billions more dollars in profit, fight against privacy invasion and the like?

Because they don't care about you and they don't care bitcoin. They care about their own profits and nothing else.

Bitcoin has never regarded any currency as an enemy, because all proportions are the promoters of Bitcoin's determination of the ultimate king's position. Without all kinds of things appearing along the way, how can Bitcoin make people surrender?

I 100% agree with you on this, these centralized exchanges are the enemies. They have really brainwashed a lot of people into thinking that this is how things are meant to be, while in the true sense it is not meant to be like this.

Bitcoin is meant to be fully decentralized and people are meant to be in possession of their private keys and control their wealth, and not have anyone dictate to them what they are meant to do with their money (just like banks would always do). I might agree that these centralized exchanges are easy to use than decentralized exchanges , which is definitely why so many has chosen it, but they are doing more damage than good to the system.

@op, from your point of view, I can understand and like you said, it's truly shameful and highly disappointing, also not forgetting that most of this exchanges force users to perform kyc when that is one of the things bitcoin is against.
But then, on the other hand, we can't really blame the exchanges for doing what they do, they all want to continue to stay in business, and in other to do so, they to obey and comply to governmental laws in other to avoid being sanctioned.
And also speaking of decentralized exchanges, check out uniswap, I believe you've been here long enough to know how much uniswap charges per transaction when Ethereum gas price goes awire, that is not ideal for the common man out there, when gas prices go up like that on decentralized exchanges, causing transactions fees to become too high, the common man resort to centralized exchanges in other to be able to trade their little amount without spending all on fees.
So my conclusion is, centralized exchanges are relevant and will continue to stay relevant in as much as they have their flaws, atleast, until decentralized exchanges become more user friendly in terms of fees.

Yes, it may be, and exactly.
But, so far, we cannot ignore it because mostly, decentralized exchanges are more trusted Moreover if this is about some local exchanges in which we can convert crypto to fiat directly to bank account, it is always about the centralized exchanges. Although we can do it by P2P, so far, I am not using this.
We sometimes have no choice to ignore this. But as long as we can avoid in order to do something, moreover when we are only doing a trade, it may not be exactly big problems as long as we don't want to convert to fiat.
Moreover, if it is about centralized exchanges, what we always take it as prblme is the necessary of doing KYC i whihc it relates to our personal informationa nd soemtimes we are also restrtced inc ertain exchanges becaus eof the countries.

Why it isn't suitable for Bitcoin? If your purpose is to trade Bitcoin, I think CEX is suitable for Bitcoin. We know that CEX provides more pairs for Bitcoin trading, better than the pairs of Bitcoin in DEX. With many pairs of Bitcoin in CEX, people can have many alternatives to sell their Bitcoin. So, it is very good for Bitcoin traders, isn't it?  

You are right about some of your points, but I do not agree with all of them. The first thing to note is that CEX is not the most vocal opponent of Bitcoin, despite the fact that it is opposed to the Bitcoin concept's ideology.But CEX is the thing that helps us connect with bitcoin. Because of CEX, we are being so helpful. Because of those countries where bitcoin is illegal, people are able to buy bitcoin. Because we cannot mine, how can we buy bitcoin? If we can buy bitcoin, what is the purpose of a DEX or a CEX?We may be able to obtain a portion of the bitcoin.If we directly go to mine, we will be in jail. Bitcoin is still illegal in our country, but 2.2%+ of our population uses bitcoin. I think all of them have a binance and a coinbase wallet. Because we started with that. 
 
You know, without CEX, I couldn't be a part of Bitcoin.It helps me to buy Look, they are a company, so if they want to continue their work, they have to give charge to the government. Otherwise, the government will stop their work and they will escape with your money. They keep the government's word, and that's why our money is safe too. And I know lots of people who use cex for the purpose of trade and holding. They use DEX. What you could also doBut declearing CEX enemies of Bitcoin is really like a joke. Please brother, don't mind. We are a community, so it's just my opinion. Other people's opinions can also be different too. Thank you. 

For many years, it has been said that the use of centralized exchanges is not suitable for bitcoin. But normal people can also invest through centralized exchanges. It seems that the use of these exchanges should not be blocked in order for this system to continue. Maybe one day, these exchanges will cease to be used, but it seems like it will be a long time before that happens

Technically you are right but practically we cannot depend on DEX as they not only need to improve the UI but also they need more volume as the volume is key issue over here wherein CEX offers more trading pair and also huge volume along with user friendly interface which drags us towards them through the basics of CEX like KYC itself is against the principle due to which bitcoin was created.

When volume is lesser in DEX we don't get to buy or sell at market price or its even manipulated by some whales who hold a good volume which is enough to turn the tides their way, these things needs to be fixed before we expect users to start using DEX.

CEXs don't force the users to pay tax, they already inform the users about it on their rules. If the users don't agree about it, the users can choose another type of exchange. Regarding freezing assets, it is only applied for a certain case. Basically, CEX has no intention to freeze their users' assets since it only makes the users be not active in trading on the exchange. Freezing the assets is the ultimate decision for a certain case.

No, we can't stop using CEX. CEX has a big role to develop crypto industry. We will have difficulties trading crypto coins if we have no CEX.

I think that even the centralized exchange operators have also realized this, that what they'd be doing can counter act the true purpose of bitcoin but like you said they have no choice. They need to do it continue maybe because they chose their business over btc because they want to profit although they still support btc ( buying and selling of it ).

There are still dex's anyway that we can use if a certain exchange is not available on our country or simply if we are against on the cex because we have the same mindset like the op. You didn't keep your money in cex but you still use a cex to trade. In the end you are still supporting them.

It's true.The reason for the creation of bitcoin is decentralized in nature.It should be an decentralized asset. But the cause of the decentralization was changed with legalization by the government and make allow of binance, coinbase to allow the government to get tax for their investments.


When we keep the money for the emergency. You should keep that on the bank and not on Exchange.Because when the government make allow of taxation. The funds in exchange can be used for the tax of the your holding. So don't do the things of holding in terms of cash.

Right now most governments can't collect taxes on crypto because they have not legalized it. However, since the exchanges have our KYC, imposing tax on the individuals will not be an issue. The exchanges can hand over all the data to the government if they demand it.



That's the risk that comes with centralization. You should only put that money on exchanges, which you want to trade. Excessive money should not be put on the exchanges.

the main drawback of centralized exchanges is that access can be closed at any time and the account balance is gone, but this rarely happens, there are enough topics in other sections. I have an extremely negative attitude towards most cex exchanges, I try to trade on dex where I always have access to my wallet.

I dont see the threat of Centralised exchange in this fashion, they actually dont request for tax, the government collect tax after that transaction fee Recently, Binance improve to help save transactions in a year and sum all the trade to know the actually amount as profit and tax. Most restricted IP are base on the countries and their regulations, Exchanges are forced to do that.

I think the best conditions is when people can choose what to use. If someone wants a custodial wallet, being aware of the 'not your keys, not our coins' rule but trusting the company more than oneself, it's fine. If someone wants to use centralized reputable exchanges like Binance, feeling sure that everything will be done well there, and even if a hack happens, the company would compensate its users, it's also okay. And it's possible to use non-custodial wallets and decentralized exchanges. I think that the freedom is the freedom to choose. And right now, when Binance is acting in a bank-like manner and imposing state sanctions on Russia, I appreciate it. It's important to have centralized institutions after all, to punish those putting others to harm, serious harm. As for taxes, op, they're also used for free education and medicine (for many in my country), roads and cheap public transport, etc. So I support the idea of more decentralized initiatives and alternatives, but I think that it's fine that centralized ones exist as well.

As long as decentralized exchanges do not become popular, we have no option but to trade in centralized exchanges and follow their rules and regulation.
It is impossible to access the centralized exchanges without KYC.

What you say is the absolute truth about how Bitcoin purpose is to protect individual freedom in managing finances. But we can't if the policies in the country of residence and the large diversity of users choose to take a centralized exchange path. There will be taxes, KYC monitoring and much more, so the definition and purpose of Bitcoin becomes difficult if we are not in El Salvador where 90% of the government is pro Bitcoin and its adoption. Therefore, it is highly expected that the individual's attachment to government policies will inevitably follow, by allowing access to Bitcoin. What you convey is really the concept of an ideal goal as Bitcoin was created, which is to break away from the bondage of rules and prioritize financial freedom kaffah.

I believe in the premise of bitcoin, I'm pro bitcoin, but it's not these companies that "kill" the original idea of ​​bitcoin, it's the users, it's us, the technological tool is already there, but we've misused it.

Let's not look to third parties to blame, we are more than them (these exchange owners), but we don't organize ourselves, we don't trust ourselves, trust is one of the main tools that brought bitcoin to the position it has today.

Let's start with something...let's push a massive withdrawal of money from traditional banks, let's start withdrawing bitcoin from centralized exchanges and trust the concept of "decentralization"...such a thing is not possible today, but I don't lose hope hope that in the maturing of the ideal of that basic premise "financial freedom" we will reach at least a balance between those who think that this right exists and between those who want to remain dominated, by the way, and include a third group that will surely always want to exist in those two incomprehensible sides "freedom and not freedom".

I can understand the disappointment of the OP but this is the sad reality that we need to accept. These centralized exchanges, if they are operating legally, need to be under the jurisdiction of the government to get their license to operate. And with the license comes with the abiding of the laws and regulations, hence, requiring KYC from all their customers. But to increase adoption, we need CEXs, as many people are confident on using these trading platforms. Aside from that, they can find important coins to trade in CEXs, whereas, in DEXs, the tokens are limited.

Decentralized exchanges are only good for casually exchanging small amounts, not for professional trading and big operations. DEXes still rely on traditional financial system for fiat payments, there's no way around it. So, without centralized exchanges Bitcoin market and price discovery simply won't exist.

I understand ehat you are trying point out but as of now, CEX are needed for adoption. Not all people want revolution, they just want to trade and earn, because exchanges offer a lot and absolutely effective to what most people want today. Look how hey work it out, offering them extra income, staling their coins just a few days and boom, they could earn. So many opportunities unlike decentralized exchange. Only a time when the people don't want to use fiat anymore, or the value of fiat is totally useless. And I think we are somehow getting nearer to that, look at your surroundings, the world is the brink of destruction. Do you think a centralized money is needed on that day? Well that's just my opinion and nothing more.

Except risking your identity being stolen and all your coins being stolen, scammed, hacked, locked, frozen, etc.

Irrelevant. You don't need to be doing anything illegal to want to maintain a little bit financial independence and privacy from the prying eyes and fingers of centralized exchanges.

Sure, but it's also about trading peer-to-peer and avoiding financial institutions, which is obviously lost if you use a centralized exchange.

The approach that OP presents us is given by the relationship that the CEX must have in order to operate. Many don't like CEX because they have to provide their information through KYC/ALM.

I am not against the CEX, on the contrary, I feel safe using their platforms. In fact I learned how to use bitcoin and cryptocurrencies through it and it was the best experience of my life.

If people don't like CEX today there are alternatives like DEXs and a range of opportunities with DeFi.

Since the creation of bitcoin, many things have changed, our ecosystem has grown exponentially trying to follow the ideas of offering us the freedom for which we believe in bitcoin.

Is it really the CEXs that force you to pay TAX on gains or your Country? I thought those were fees on trades I believe that traders should know better now not to keep hodling their crypto bags on CEXs, so that they can reduce all these issues of wallet freezing and as for preventing their services to some location, I know some inline stores do that too like they don't ship to your country so not all regions will enjoy every service by some organization or Business.

I agree that there might be no problem using CEX but storing your Bitcoin on it will create a problem. Some of us are against of using CEX because it might actually be killing the liberty of having a BTC on your own but it's a people's choice why CEX are getting popular these days. DEX on the other hand might be striving each day to survive but they still remains strong since there are still people who believe in them and is actually using it until these days.

I think it's not the CEX is the problem here since if we use Bitcoin and at the same time exchange it with fiat then it's just right that they should follow the government rules or they will lose their business.

Yes, but there's nothing in this world that can be forever free or give liberty especially when the institutional investor joins the ecosystem and I think we should be ready for what may happen in the future either cause the institutional investor are buying Bitcoin more than we could imagine.

Coinbase is the worse among the listed exchange because they have proved to be the worse exchange by following the SEC regulation before every other exchange site implement it.

In this situation, the best thing to do is ignore the exchange site that has regulation policies, and use the alternatives. However, I don't blame the big CEX because they are CEX, not DEX, and the last time I check the Bitcoin Foundation and community are to blame for this because Theymos once raised the issue of Elizabeth T which says "The Bitcoin Foundation needs to be prepared and ready to expand in areas of key importance should matter arise such as increased government regulation and a crackdown on Bitcoin related businesses and users.  While increased government regulation is still a potentiality and not necessarily a reality yet, the foundation still needs to work to find a balance between proactivity and preparation for what lies ahead as the currency still grows in prominence.  The Foundation again should work to develop tools and guidance for the Bitcoin community to have on hand should lobbying efforts to need to be carried out in the future. "
But not tangle thing was done


The worse is yet to come mate after the institution has understood the benefit of Bitcoin and dominating the market.

There is no problem using CEX even when they are asking KYC and some other stuff that is really not necessary. There is no escape anymore when you have already sent your documents to one of the exchanges. You send to one, it means you are documented. Using BTC is not a crime though.

Not sure if the ideology of BTC is all just about freedom and liberty. After having some BTC for the first time, I felt like I'm not unbanked anymore, this alone does feel freedom to me.

Exchanges are tools used to trade cryptocurrencies, it does not directly make bitcoin popular or reach more users, rather it is the userbase that makes the exchanges popular. If more people moved over to using decentralized exchanges then it would become as popular and would be said to reach more people.
Centralized exchanges act as intermediate, so trading on such platforms is not really peer to peer or decentralized as bitcoin was meant to be.

I don't think CEX is the big enemy of bitcoin but on the contrary, CEX also helps the development of bitcoin to reach more users. The exchange will promote its website to many places to come and join them. When people join, they see there is bitcoin, where bitcoin has an up and down price that they can use to make a profit.

Before bitcoin was popular, centralized exchanges were not as strict as today. As I recall, in the past, at Poloniex, we only needed to register using our email, name, address, and phone number (if I am not mistaken). But after Poloniex became popular, the site made an option for its members to increase their level to level 3 but they need to re-verify. It also happens on other centralized exchange sites because now, the government has tried to intervene and maybe they are pressuring centralized exchanges so that their members do more detailed verification.

my gripe with centralised exchanges, is like this
binance has in its terms that it cant serve american/canadian customers.
its HQ is in asia. but its markets revolve around the USD

what exchanges should do is not be so (excuse pun) tethered to the dollar. and instead have separate market order books for different fiat currencies, whereby the markets dont oscillate(move back and forth in a pattern) as a sheep to USD value

for instance OTC/ private exchanges that only operate in asian markets should be at a premium or discount to other markets based on USD.
where the value doesnt peg to USD

 look how sheepish the markets are


again binance does not 'supposedly' service US/canadian customers yet it sheep follows US exchanges.. not closely. but EXACTLY like for like
https://www.binance.com/en/terms

this mimicry is too close to be a fluke. after all people in say asia/europe should have different sentiments and trading patterns than say traders in the US.
the reason the markets look the exact same is not from different sentiments of different traders on different markets, but on the central exchanges arbitraging each other to stay on par with each other, rather then letting their customers just play the orders the customers want to play, with their own separate sentiments in different markets

majority of the market place is still preferring to use FIAT to get goods and services. Good and services -value and prices like it or not are based on FIAT. not Bitcoin
sure you can use Bitcoin to pay for some goods and services now. However the you are still in the circle of fiat .

Prices are not based on Bitcoin at all.
Therefore it makes more sense to use FIAT.
Bitcoin is just a store of value. that is how the market is taking this.

I am not saying that CEXs are the biggest “enemies” or “threats” to BTC. It’s just that they have no choice but to comply with the regulatory requirements of a certain country in order for it to operate and become available to those customers (especially sanctions).

I only use CEXs to convert my cryptocurrencies and transfer it to a custodial wallet where I can withdraw it straight to either bank or mobile payment provider. But it’s not a good idea to make CEXs as a storage source if we want to hold BTC or any cryptocurrency.

exchanges dont 'freeze' accounts at a whim. because people can sue businesses that breach certain standards.
yes exchanges can put terms and services for how customers should act while using the service which then gives reason to freeze an account if certain acts are against the business policy or regulation. (so people should read terms and conditions)
yes they can put temporary 'server overload' or 'down for maintenance' pages up but they cant freeze an account at a whim temporarily without reason

as for manipulating. well thats insider trading, which comes with investigations and fines. which is why they wont do it for silly small amounts of only a few customers balance level. it would need to be whole market value amounts to make the risk of fine be worth the possible profit.

it was easily possible 10 years ago to play the markets but these days, they earn enough just servicing customers to not need to also be angering the customers by stopping customers.
yes they can arbitrage their reserves to other exchanges miliseconds before a customer on their market causes a spike or crash. but they cant just play around with your own customers on their own market

EG exchange A sees a potential $1k spike/dip on exchange A by a customer, so exchange A uses its reserves on exchange B to copy that order in milliseconds, thus making exchange B mimic exchange A. (before exchange A's customer order fills to then have that customer to then arbitrage to exchange B for a double sweep)
however exchange A cannot just halt an order of a couple customers repeatedly in exchange A without it causing a few flags of its own oversight popping up which can trigger exchange being investigated for insider trading

There is a more manipulation scene that exists in exchanges where they will liquidate your positions by either freezing the accounts temporarily or moving the market in the direction to hit the stop losses.

Unfortunately we have very few good CEXs which have more liquidity and those CEX exchanges are taking advantage of this and making a lot of money by manipulations.

Now try to know this, individual have to come to the realization of their access to freedom in decision making, let's take Binance for example, this exchange is know world wide for quality service delivery but lack security privacy, but the choice is yours to choose either to use Binance or not, we have other exchanges, bitcoin wallets that guarantees more than Binance could offer, this is our choice to make a decision as no one is forced to decide on using a particular exchange, if what brings you on Binance is no more there then one can as well quit and sought for alternatives, do you even know some people are the slave master of themselves unknowingly because of lack in knowledge to what they have.

exchanges back then were unlicenced.
do you think they had the choice?
hmm..

the thing about exchanges are.. they involve EXCHANGING, meaning FIAT, meaning fiat laws apply
they did not decide one day 'lets spy' they were made to by having to become legitimate if they wanted to continue doing business
when bitcoin got treated as an asset instead of just a product they had to become legitimate money service business. meaning they had to get a MSB licence, or get shut down.
they could no longer get away with being merchants/'goods swappers' they were being treated as potentially illegal currency traders/money service businesses, unless they got licenced

the problem that made them have to go legit was that bitcoin got legitimately recognised as an asset instead of a good/product

you may not like the outcome of this. but atleast learn the how and why, and understand its not the exchanges fault.
the funny thing is that it has been weeks/months since the other draft bills have been doing the rounds on social media, and you still have not learned anything about brokers or MSB's or even regulations to understand the way things work in the real world

here is a hint.
the latest couple draft bill you have been mis-understanding.
the first you have been trying to manipulate into your warped vision.. brokers even in LN channel routes (businesses taking a fee for routing payments) and decentralised exchanges will have to get a MSB licence too.. and no dont you even dare show your idiot side by pretending it only affects developers and miners(reality: they are not brokers).. because showing that side just reveals how much you dont know about what a broker/MSB is,
the second you pretend that it gives strange powers that can be used at a whim without court orders or oversight. (reality is it took out the whimsy of using unapproved laws before said laws got ratified)

exchanges are not the enemies, because that then means that even LN route hubs offering payments for a fee are enemies too.. (oops did i poke your bears softspot) they just become the port border guards of all asset/currency jurisdiction, rather than just a port shipping company moving goods

please take some time to learn
and i suggest with your desires, hopes and DREAMS of your altnet loyalties. LEARN FAST because you will soon realise how your favoured services of your altnet will get affected by this. and no stop the fantasy of thinking it affects devs,miners and leaves your special channel services alone. learn its the opposite it leaves developers and miners alone and affects your special channel services

Which exchange to use is a clear choice from what I understand about @ op post. Bitcoin is total freedom only with DEX but centralized exchange is a big treat. It is alarming with the rate at which centralized exchange choke their clients with KYC that are irrelevant atimes. If it was limited to just email address and phone numbers it's would have been a bit fair but it goes all the way to getting identity cards and international passport

This is a false equivalence. Centralized exchanges 10 years ago were not anti-bitcoin like the centralized exchanges today are. They did not demand ridiculous amounts of KYC and even go as far as asking your to reveal your employment and income source. They did not arbitrarily lock accounts or seize coins. They did not hire blockchain analysis companies (or event create their own!) to spy on you and monitor your transactions. They did not discriminate against individuals based on the history of their coins, even though that history has nothing to do with the individual in question. They did not refuse to let you withdraw your coins, censor your transactions, report you to your government, sell your data, and so on. Centralized exchanges might help more people buy and sell bitcoin, and of course people are free to use them if they want to, but they are absolutely antithetical to many of the founding principles of bitcoin.

Centralized exchange might not literally mean to serve as threat to Bitcoin but they way they go about their p2p exchange and the unnecessary KYC verification stands as a big threat. Mostly when this centralized exchange go as far as freezing their customers wallet maybe due to incomplete KYC verification or massive funds
This is where the frustration that accompanies this centralized exchange comes from. And most times users account could be freezed for a long time pending when a complete KYC verification Is done keeping the owner of the wallet at the mercy of this so called exchanges

First you said Bitcoin is freedom, but the last line you forcing someone to stop using centralized exchanges? this is not 100% freedom. Let alone people to choose which exchanges they use, it's either centralized exchanges, custodial P2P exchanges, or fully decentralized exchanges. There must be a reason why they choose to using any exchanges and the most users prefer to using centralized exchanges. This means they don't care with their privacy concern and their funds partially got controlled by the exchanges.

I partially agree, but the thing is, big exchanges which are centralized only exist for big trades and if they don't actually implement of extracting some information about the users on their exchanges, the risks of money laundering, and other horrible crimes are too high, besides, there is no compulsion for one to trade on CEX, there are decentralized exchanges as well for those who wants privacy, I am not supporting KYC of centralized exchanges but the amount of volume of trades that happen there, some precautionary measures should be there no? But it doesn't take away the vision of crypto since there are lots of other ways to buy crypto without revealing personal information as well as one can always use the blockchain for transactions without any medium of exchange!

Satisfying an individual can be very easy, but with a large community, this can seem difficult. There are issues where we are not satisfied with the current CEX, but admittedly, it is still the place to go if people have access to more things. It is like an enemy of BTC as well as a friend to help BTC reach many people, I hope to find more than just complaints or praise.

The exchanges have to make money, it is a private business. The fees they charge do not bother me.  My problem with centralized is compulsory KYC for their customers. It is like relinquishing power to the corporations. If there was provision for an easier alternative for p2p services and trading crypto most will stop using centralized exchanges. I only deposit coins I want to immediately convert to fiat in CEXs.

if you want to use a business that is involved in money services (exchanging bitcoin for fiat) then you have to accept that the need of the FIAT part then becomes a need to obide by fiat laws.
just because one side of a buy-sell is bitcoin. does not 100% absolves a trade from fiat laws.. because the other side of a buy-sell is fiat

this is not the fault of the business. its the fact that any business doing money services using fiat needs to abide by fiat laws
EG just because you want a banana. but want to trade fiat for a banana. does not automatically free a retailer of its fiat obligations of sales tax purely because your personal interest is only banana's

the very fact that you want to involve a trade of a banana for fiat makes your real physical need of the swap, then forcing the service that provides that swap for you to abide by fiat laws. you WANT a banana but you NEED a service that swaps fiat for banana's. so retailers have to abide by fiat laws to satisfy your banana 'WANTS'

yes you can say 'but all i want is a banana' but reality is if your at a retailer trying to get a banana, you actually are part of the fiat-banana trade. so you actually need fiat aswell.

as for pretending 'de-fi' and 'd-ex' things will solve this.
well it wont last long.
any human/entity offering a service for swaps, and receives a fee for offering the service of swaps. needs to register as a money service business. if they dont and they are found. they can get highly punished

just trying to pretend your a Dex or a De-fi does not absolve you of a financial crime an authority defines.
your protection is not 100% that bitcoin is untraceable pseudonymous. because authorities can find you by tracing the fiat instead
(high amount of personal wire transfers to lots of different people each day.. its how they found the 'localbitcoin' traders)

bitcoin does not make fiat laws get repealed simply because 50% of a trade is bitcoin.. because the other 50% is still fiat. thus fiat laws still apply

That's true but there is another aspect to this problem which is the current FIAT monetary system.

The real problem is, you can't really spend your crypto without converting them to FIAT first and when FIAT is in the picture, it is impossible to make it work in a decentralized way. You send crypto, you get FIAT. Some middle-man will have to take your crypto and give you FIAT. I know the decentralized exchange Bisq claims to do it but I am not sure how that works. If that was working properly everybody would use it but as you now it is not the hottest shit around.

That is partly the ideology of bitcoin not the whole cryptocurrency scene. In fact the main ideology of majority of altcoins is to be traded for profit and nothing else.

Well, there is no restriction on who can use bitcoin. It is free for some people to create some centralized service and use bitcoin in that world. They aren't threatening bitcoin or its ideology, they are just using it the way they like and nobody can prevent it.

I disagree. As I said above, it is free to use by anyone for any purpose and whatever they use it for is not changing anything. For example for the past 4 years there have been people who insist that bitcoin is only a store of value and not a currency. If that's what they want to think, it's fine but it won't change anything about bitcoin.

It seems like the problem you have in mind lies elsewhere considering that the revenue government makes from cryptocurrency tax is negligible compared to literary taxes on anything else.

This I can agree with. We already have decent solutions like Bisq, what we need is more people to use them so that their volume increases and any possible bugs are found and any feature they have be improved.

Bitcoin was created to be a free network which can operate without the need for a third party, but so many people who hold bitcoin are not doing so because of the freedom or ease of access it offers, but rather because of the speculative value, and these people do not mind giving up their privacy and freedom for the ease that CEXes supposedly offers

This would not be happening anytime soon, you can even judge through the comments here on bitcointalk that majority of people are not ready to accept that centralized exchanges are an antithesis to what bitcoin was designed to be.

Ahhh, don't overthink it. Even though I understand what you are saying but I don't think CEXs are such an enemy as you say. How many DEXs were there when Crypto/Bitcoin started? I agree as others have pointed that CEX have their downsides however everyone in the system doesn't feel the same with some of these issues and don't have any problem with KYC and even taxes as long as they can trade their crypto assets.

CEX are like other centralized payment platforms such as Paypal. They can freeze an account any moment and control the affairs of their platform. Most people who make use of CEX should have leant their lessons regarding the recent ban on suspicious accounts; that keeping money on CEX is risky. Knowing that the key is not yours why not trade and withdraw some amount and leave spare funds for trading in the future. A lot of traders or users of bitcoin are using Exchanges as wallet and its not recommended.

Centralised exchanges are not criminal enterprise and bitcoin haters. Consider how far it has brought bitcoin awareness and transactions to the people. Consider how easy it is now to transact bitcoin and other cryptos and what it was 10 years ago. How many decentralised exchanges are even here now to start with, talkless of how it was a decade ago. We should learn to appreciate things step by step. The only problem I see with centralised exchanges is just that they keep customers funds and can deny them access because of one thing or the other. Minus that, centralised exchanges have done more good than bad for cryptocurrency.

Well, it's not that decentralized exchange doesn't exist. Bisq has been operating for a long time but its trading volume is way too low compared to CEX and other less decentralized exchanges. You should probably blame the people who prefer to use Binance or Coinbase. It's the reason why these exchanges are thriving.

The only downside of Centralized exchange is being Centralized   which is equal to having control over users. Cex has a huge number of users who don't seem to mind the downside provided they are able to buy and sell btc, they serve as an avenue to access btc quickly and easily compare to dex, some people don't find using dex easy, and I don't know much about btc ATM, how accessible and easy to use they are.
Centralized exchange in a way makes buying and selling Bitcoin less stressful with a price (control) which to me don't seem to be a threat.

Centralized cryptocurreny exchanges have one big advantage-they are user friendly.
Their biggest disadvantage is that you don't have full control over your coins.
You have to understand the centralized exchanges are simply companies,who are complying with the rules,which were imposed by the governments,like KYC or paying taxes over crypto earnings.
CEX have helped a lot for Bitcoin/crypto adoption,so I can't say that they are biggest enemy of Bitcoin/crypto.
The biggest enemies of BTC/crypto are the FUDsters and BTC/crypto haters.
Most of the governments are neutral towards crypto.

We're simply not ready to stop using CEXs yet, as obviously bitcoin isn't adopted enough to be able to buy and sell(or convert) it easily to almost anyone. What we need right now to progress are non-custodial peer-to-peer exchanges with good UX.

I never find centralized exchanges a threat to bitcoin. Only through these exchanges the bitcoin market have grown to this level. I don't say decentralised exchanges are bad, but coinbase, kraiken, Binance and other centralized platforms gave the users the ease of access and trust. The freedom and being anonymous makes people prefer DEX. With Dex the fees were low compared to the centralized exchanges. Moreover such a massive usage of bitcoin and other cryptocurrencies could've never happened if these exchanges haven't existed.

On the other hand there is flaw with these centralized platforms. These platforms having the complete control over our funds is like having our funds in our banks. So, it is upto the users choice to pick the one that fulfill their need.

The ideology behind crypto is freedom and liberty from the current government system(s) that are inherently wrong and elitist.

HOWEVER

Centralised exchanges such as Coinbase, Kraken and Binance take a noble idea of bringing Bitcoin to the masses and mock it by affiliating with governments (and governmental agencies) that the very concept of Bitcoin is designed to rebel against.

Big CEXs are killing the original bitcoin spirit by forcing users to pay tax on gains, freezing user's assets, preventing users from using their service depending on their IP and more.

This is horrible. This is not what bitcoin is. This is not freedom. This is not liberty.

Taxes contribute to the regimes that so many of us are against. How can we continue using companies whose values don't align with ours?

Taxes are theft and fund wars and needless bloodshed in countries such as Iraq, Afghanistan and more.

The solution is pretty clear: More projects need to be released that are focused on building sustainable decentralised solutions to enable users to trade and purchase bitcoin (and crypto in general). Right now the main areas of focus need to be security and simple UI/UX interfaces.

And we need to stop using CEX and funding what we are all against.