- As a job ad reveals, BitMEX is currently looking for an Anti Money Laundering (AML) manager to develop a KYC plan for its customers.
- The implementation of a KYC plan could have far-reaching consequences not only for BitMEX, but also for the entire crypto market.
BitMEX, one of the currently leading Bitcoin and crypto-derivatives exchanges, could soon introduce a Know Your Customer (KYC) verification, according to circulating speculation. As the popular Twitter user “I am Nomad” announced, BitMEX is currently looking for an Anti Money Laundering (AML) Manager to develop a KYC plan for its customers.
Bitmex is hiring an AML manager to design their KYC plan for general customer
Also is hiring a java developer with notes of key systems they will be working on. pic.twitter.com/TB4ByW53gt
— I am Nomad (@IamNomad) March 21, 2020
As some experts analyzed via Twitter, this could have a significant impact on Bitcoin, given BitMEX’s central role in the crypto market. The derivatives exchange is notorious for its Bitcoin (XBT) perpetual swap, which can be traded with an extreme 100x leverage. As CNF reported, the Bitcoin trading option is so pivotal to the market that many experts attribute the historic drop in Bitcoin price on March 12th to the liquidations on BitMEX.
Some analysts even go so far as to say that if BitMEX had not suspended trading due to a botnet attack, the Bitcoin price would have fallen close to zero. But it is not only because of this incident that BitMEX has been criticized by the crypto community. On February 13, the XRP price collapsed by 58%, from 0.34 USD to 0.14 USD, on BitMEX within two minutes.
The positions of many traders were liquidated when the price plummeted; stop losses of some traders did not work. Not surprisingly, many users strongly criticized BitMEX and even accused the exchange of malicious intent. Some traders claimed that the crash was caused by the exchange, others blamed BitMEX CEO Arthur Hayes.
What effects can be expected on Bitcoin?
If a KYC verification on BitMEX is actually introduced, traders could flee to other exchanges that do not have a KYC requirement, which could have far-reaching consequences for the cryptocurrency market. Stackin’ Bits stated via Twitter that if BitMEX will have less users in the future, the notorious BitMEX insurance fund, worth around 35,000 Bitcoin (BTC) or $224 million, will have to be liquidated:
For me one of the biggest things that makes me bearish on this is that a lot of the bigger money has already left mex. Maybe it was market conditions, or maybe some of them already knew KYC was coming…. but the bearish scenario is the survival of Mex… and their insurance fund.
Of course they have a cash machine with an active exchange. My point is if they were to shut down some day… that’s a monumental amount of BTC that is simply no longer needed to back up the exchange. If Bitmex were to shut their doors… that insurance fund gets liquidated
Thus, selling large amounts of BTC from the insurance fund could have a huge impact on the price of Bitcoin. However, it remains to be seen whether this will happen and users will actually leave the exchange in droves.