TL;DR: Letters from Venezuela is an exclusive CoinSpice series, an inside look from a reporter on the ground, documenting the South American nation’s last stand among sanctions, political unrest, international condemnation and concern, economic collapse, and the specter of cryptocurrency possibly demonstrating its main use case. In this installment, Bittrex, a US-based cryptocurrency exchange, announced they will not continue to service Venezuelan users. Though the exchange did not explain the reasons behind the sudden move, observers believe it is likely the result of Trump administration sanctions.
Bittrex Suspends Services for Venezuelans
Cryptocurrencies are powerful tools to exert economic freedom. Being permissionless, pseudonymous and censorship-resistant, there are a myriad of uses for them in countries with failed fiat currencies. But, regrettably, centralized exchanges often fall short of these ideas, and must operate in accordance with a myriad of international laws. Bittrex, a US-based exchange located in Seattle, recently informed its Venezuelan customers the exchange will be suspending their trading services to citizens, closing all their accounts.
In an email, the exchange explained, “Bittrex International will be ceasing operations for your country of residence,” without citing specific reasons, informing users of the Latin American nation they have until October 29, 2019 to withdraw funds. And while there wasn’t a detailed explanation, it’s clear US-based companies are starting to apply the sanctions described in an Executive Order from President Donald Trump signed last month.
It prohibits all US companies from conducting business with the government of Venezuela. And despite sanctions supposedly aimed at government officials and related agencies, such sanctions seem to inevitably bleed into regular, everyday business dealings. It’s not unusual for international businesses to err on the side of caution, ceasing operations in forbidden countries altogether just to be safe. That’s at least the case here.
Executive Order 13884
Shortly before, in fact, software giant Adobe suspended its services to Venezuelan customers as well. Adobe was, however, more forthcoming than Bittrex, and did point to the Executive Order 13884, explaining the company’s decision was a direct result. Similar actions were taken by crypto-investment platform and popular wallet Uphold. It too is closing accounts of Venezuelan citizens. Uphold CEO Juan Pablo Thieriot appeared to not want to blame US sanctions, noting there was not a “one size fits all reason.”
The logical question for Venezuelans immersed in this world would be how to sidestep sanctions that will inevitably keep happening. Centralized exchanges like Bittrex are, clearly, not a good place to safeguard funds even in countries without formal economic sanctions. Not your keys, not your crypto, the saying goes. Housing crypto offline, however, is impractical for traders and those in need of liquidity fast to take advantage of price fluctuations.
Decentralized exchanges could be a solution, but they are only in the nascent stage of development, and few are geared toward Latin American markets, and all seem terrified of Venezuela. Most decentralized exchanges do not offer the most popular assets to trade, and they often offer poor liquidity. More promising iterations, such as the new Binance DEX, are already geoblocking Venezuelans by default.
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