Topic: We shall separate commercial exchanges from investment exchanges - page 2. (Read 348 times)

I don't get the point of your forum thread.
All crypto exchanges are regulated(or they should be). It doesn't matter if they offer just "crypto to fiat and vice versa" financial services or crypto trading/leverage/margin trading financial services. The authorities might distinguish them, but they are both regulated. In both types of crypto exchanges the users have to submit KYC verification, just like in all fiat financial services.
It doesn't matter if you are using a commercial or an investment bank, in both cases you have to submit KYC verification.
Separating the exchanges into different categories isn't our job. I guess that they are already separated by the regulators.

It's good to define activities and separate entities based on the services they provide. It becomes easier for the regulators to regulate and protect the interest of the consumer.


Well, if these kinds of exchanges are not regulated, then the majority of the black money translations will take place here. In the cryptocurrency world, it's a big risk. Many governments have already raised their voices against money laundering risks. Non-regulation will just make it worse and more uncontrollable. If regulation is under consideration, both kind of exchanges need to be regulated.

Wrong, bitvavo offer staking program.


If you scared of FTX or Mt.Gox history, why it bothers you when you only use the exchange for trading? You deposit from your wallet to the exchange with high priority speed, your transaction will be included on the next block and your coins will arrive around 5-10 minutes. Then you sell your coins with the current rate and withdraw it into your wallet, maybe it takes 5-10 minutes. In short you just need to spend around 20 minutes, I don't think the exchange will get hacked during your trade.

If you worried the CEX will freeze your coins, just switch to DEX.

There's no rule to prevent CEX to not offer staking program, lending, or anything related to make more money.

If cryptocurrencies develop so that exchanges can be decentralized between these currency pairs, all we will need is interfaces that work like banks to convert dollars or local currencies into cryptocurrencies.
Until this happens, users will move between centralized and decentralized platforms according to criteria such as their desire to verify identity, fees, liquidity,...etc.

Imposing regulatory restrictions on centralized exchanges is mandatory, but I do not see the possibility of regulating decentralized.

Thanks a lot franky1, at least someone who fully understands me.

Regulation is not really my subject, but there's no doubt it's needed. We don't want the FTX debacle to happen again. It would not have been possible if FTX had been a basic commercial exchange. Swap shop as you say. I used the terms commercial exchanges and investment exchanges thinking about the banking sector.


I just can't. I've used Kraken when it was a simple exchange, and someday I discovered they had turned into a cryptocurrency portfolio manager. Without any warning... That happened quite a while ago, though.

Nothing is fine here OP, why would the government feel the need to regulate crypto exchange? Forget what you know, we are talking about those who are in power and they are not benefiting from something that the entire world are investing their money on to make more money, yes the government will feel left out and unhappy.

Commercial exchanges are like those Paxful and some others that deal with gift cards and co but I don't see them ever doing do good in their business compare to investment exchanges, many commercial exchanges have been around before Binance came around and even small investment exchanges like Kucoin and others are doing well than commercial exchanges.

alot of people here cannot even get the buzzwords right let alone associate the correct businesses to the correct buzzword

an investment company use terms like portfolio management not "exchange"
they use brokerage not "exchange" they use investment firm not "exchange"

so lets define 2 terms
portfolio managers (custodians of investment)
and exchanges(swap shops)

the latter would be a service of one currency in.. another currency out.. same day. no custodial service
the former would be a custodian. that allows buys and sells of multiple assets in and out interchangeably while still holding onto and being responsible of their customers value/security

there are not that many actual "swap shop" exchanges that are decentralised. but there can become some that offer instant swaps without long term custody services needed. and it can become its own industry.

however these swap shops would still need regulation because they are still a facilitator of finance(a money/currency business) thus still end up needing to KYC customers
however due to lack of custody service they wont need extra requirements like auditing customers holdings or insuring customer holding becasue its a straight trade in and out

where as portfolio managers would need extreme regulation to support their competence to manage and hoard customers value as well as needing regular audits and pay for insurances and security and other safe guards like having a customer service team for customers to actually contact

...
i know people will say "its bitcoin there should be no regulations" well that was true in 2009-2013 when bitcoin was not seen as a currency but as private property(asset) but now that its defined as a currency asset. currency laws started to apply.. and the only way to avoid it now is if it was challenged in court to redefine bitcoin as no longer a currency but again as a swappable/tradable private property. then without the currency jurisdiction currency laws wont apply. thus no regulations again

May you share more information about the Kraken changes from a commercial exchange to an investment exchange, please.

You named investment exchanges like Binance and I know that you can exchange your bitcoin, altcoins to cash on Binance. Is it different from commercial exchange?

Quick  but safe or not, it will depend on your trading with your trade partners.

If you don't own your private keys, it is always risk on any exchange.

People are used to divide exchanges between centralized or decentralized, regulated or unregulated, let's forget all this.
There are exchanges which you can only use to buy or sell cryptos, the commercial exchanges, and then there are investment exchanges which want to keep your coins, because they propose you plenty of services for them.

Commercial exchanges are:

bitcoin.de
paxful.com

Investment exchanges are:

binance.com
coinbase.com
poloniex.com

A huge problem is that commercial exchanges are small low profit companies, whereas investment exchanges are making much more money, so some commercial exchanges are turning into investment exchanges. Kraken did that to give an example.

A commercial exchange is just like the currency exchange booth you find in all international airports. You exchange one currency with another. That's it. It's quick and safe. Use investment exchanges at your own risk.

Okay. Thanks for the correction O.P, because the name Commercial & investment kind of got me confuse and i'm happy you were able to come clarify my doubt by listing the exchanges that falls within those category

.I understood you correctly, unless your statement means a total different thing from what you mentioned above in your OP.
And I also don't think it's possible for Dex exchanges to fit in on your commercial exchange like you propose. Because being commercial and also being under any regulatory means there will be a user account that can be controlled, which they will require customers to register, funds that can also be staked, frozen, etc., any exchange that has any of the aforementioned features can no longer be considered a Dex. Or will your defined commercial not require all these things?

I'm afraid I have to disagree that the only reason government regulates exchanges is so they can tax them. Exchanges are run by human beings and if human beings are not regulated they do whatever they want.
Government regulations are necessary to an extent. It's the same way the banking sector is regulated. There are a lot of reasons why exchanges should be regulated. Fraud is part of the reason.
The only problem is government use this as an opportunity to fight against crypto.

I don't like the term "investment exchange". If you want to gamble with margin trading, then why not declaring them casinos in the first place? 

No matter how those few "crypto-trading-firms" can be the worst, I'll go with responsibility above all principle, and disagree. Every single time in history, when regulators enter a field, it dramatically drops in novelty. Invite regulators inside, and expect things to go worse.

Sure, ensuring the exchange doesn't run a federal reserve system is good; but you're probably talking about more. Can you give a little bit more context? How interventional the state should be, when someone chooses to trade a bunch of shitcoins on Binance, for example?

If regulation is your main reason for wanting this seperation then I will suggest you align it with what many in Crypto space already believe is reasonable which is to create a distinction between non-custodial/decentralized and custodial/centralized exchanges, and have the centralized/custodial exchanges regulated by governments. The decentralized exchange should be free from such regulations depending on how decentralized and Bitcoin-friendly they are.

Sorry, but you got it wrong.

Commercial exchanges are:

bitcoin.de
paxful.com

Investment exchanges are:

binance.com
coinbase.com

So O.P, how about I say your thread is not complete, because after mentioning that we have two kinds of exchanges, I expected you to give an example which you failed to provide not even one, because by providing that I think it would have help people to understand more what you actually meant, of which I don't mind giving some examples which I stand to be corrected if I'm wrong, as it goes as follows;

Commercial exchange  (i.e they help people buy and sell coins)
1. Binance
2. Coinbase
3. Kucoin
4. Remitano
5. Bitstamp

Investment exchange (i.e They help people invest in several coins)
1. PancakeSwap
2. UniSwap
3. SushiSwap, e.t.c

More regulation with direct trading from and to fiat currencies.

I don't see more reasons to have stricter regulations because it is an exchange where you can trade with Margin or Futures. Margin and Futures are very risky but other markets like stocks, forex have high leverages too.

Exchanges with products and parnerships for commercial trading will charge additional fees on users and business companies but it is acceptable because they have to build up more complicated platforms and spend more resources for security, maintenance, marketting.

You can use your exchange account to store your coins as investment but it is risky and I disagree to classify exchanges as investment exchanges.

The difference shall not be limited to regulators, they also matter to everyone.

Commercial exchanges are much safer then investment exchanges. If you don't want to take any risk, don't use the investment exchanges.

You totally misunderstood my subject.
I described 2 kinds of exchanges, and both can be centralized or decentralized.

They are yet not done talking whether which crypto are Security and not. It wouldn't be over until they distinguish which is which. The exchanges are fighting back and I think more of the people in the community like Tim Draper are going to come out to support Gensler be remove from office. So there could be a fair fight if this will happen.

Right now we only distinguish CEX and DEX but to SEC they are all the same when it comes to protecting investors as Gary always says.