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Should Crypto Trading Platforms Embrace VPNs?

November 12, 2018



Three years ago, several Blockchain companies left New York in response to the BitLicense, which aimed to place them under a common regulatory framework. This year, rampant speculation has been hitting the space daily on what Crypto projects will be the next to fall to regulatory crackdowns. Then came the charges that were brought against EtherDelta last week.


Now, we are left with two questions: who will be next to fall and why? Before this happens, can Crypto exchanges do anything about it?


In terms of the first question, only time will tell, especially because the regulatory system in the United States is so fragmented. As to the second question, it is possible to conclude that further transparency is key.


What do I mean by this?


On September 18, the New York Attorney General released a report on its investigations into Crypto exchanges operating in New York. In it, according to Coindesk and other sources, the AG’s office indicated that Virtual Private Network usage by Crypto exchanges may assist market manipulation in some fashion. How this might happen boils down to what a VPN is at its core. Because it is a tool to thoroughly mask a computer’s IP address and all of the data that it transmits, a VPN essentially acts as an extra layer of security for all Crypto trading.


Perhaps even more importantly, since VPNs let their users bypass excessive censorship by heavy-handed governments, they represent the only way for these users to invest in Cryptocurrencies. Because of this, at the same time, VPNs represent the only avenue for Crypto exchanges to stay live in countries like this. China serves as the top example for this, though with the events surrounding EtherDelta, the United States has come into focus in one specific sense. With EtherDelta being the only high profile exchange to be recently taken down by the United States government, it is logical to wonder why others have not already followed.


Is it because using VPNs to obscure certain elements of such platforms is an industry norm? Is it because while the platforms do not do this, the users do? Perhaps, the answer lies somewhere in between these two possibilities?


According to the same Coindesk article that referenced VPNs and market manipulation, the possibility of Crypto exchanges obscuring where their headquarters are is all too real. Apparently, in August, the Chinese government made a motion to ban more than 120 websites that were using VPNs in order to run Crypto exchange services in China.


Judging by the same report, the Chinese government also does not actually have a reliable way to block VPN usage. Given this, it is safe to say that if China, who is known for having the “Great Firewall” cannot do this, then the United States has almost no chance of succeeding where they have failed.



By: BGN Editorial Staff

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