CRYPTO MOVERS AND PRICES
CRYPTO STORY OF THE DAY
Yesterday, BitMEX announced that they would no longer be offering their platform to Japanese residents. This move supports a trend of geographical fragmentation of liquidity pools we think will be key to understanding and navigating the crypto ecosystem.
BitMEX arguably remains the World's most active crypto-settled derivatives platform. In a notice, the company outlined that they would no longer be allowing Japanese residents to open new positions on their platform as of May 1. Existing open positions would otherwise not be affected. BitMEX cited the incoming Japan Payment Service Act which imposes new regulations around the leverage calculations of crypto-derivative products offered in the country. Japan has been enacting a slew of changes to their crypto-market oversight including the launch of a self regulatory organization which was joined by Coinbase in early March.
Takeaway: There is plenty of history of unlicensed crypto-derivative exchanges geo-blocking various regions. The most notable of which has been the US, where, often because of fears of retroactive penalties, trading venues have restricted access from residents. Japan is the most recent major market on the BitMEX restricted list that had previously included China, smaller regions like Bermuda and Seychelles (often places where the company has offices) and sanctioned nations such as North Korea and Iran. Our thesis has been that this trend would broadly continue. We believe it's possible that other regulatory allies of the US, such as Canada and the UK are also eventually blocked. Ultimately, such a path is one towards fragmentation that, while complicating crypto liquidity, adds to the opportunity set for arbitrageurs.