Our Thoughts – BitMEX KYC

Learn what the BitMEX KYC Verification Program will mean for you, and what we expect this will mean for the future of BitMEX and the crypto-space.


BitMEX has announced that they will from August 28th begin asking users to verify, the good news is that users will have until February 2021 to complete the KYC verification process. 

 What Will the Verification Entail?

bitmex verification

The process will be very similar to other exchanges with KYC requirements. Exchanges tend to have several levels of KYC, while BitMEX has not communicated this will be present in their verification process, so the information required is similar to the highest level of KYC on other similar exchanges.

Users registered on BitMEX will be asked to upload a picture of their government ID, proof of address, selfie, and a couple of multiple-choice questions regarding how you acquired your funds and level of trading experience. 

This is quite the change from being one of the most accessible platforms to sign-ups without any KYC levels at all, except corporate accounts or very large-sized traders. 

Writing on the Wall

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We had a foreshadowing of what was to come already back in March, BitMEX was listing out job positions to assist with implementing AML (Anti-Money Laundering) and customer screening. 

KYC is not entirely new to BitMEX, in fact, large money accounts and business accounts have long been forced to go through a verification process. 

Motivation for KYC

As crypto exchanges expand their services, there is only a question of time until they will have to follow AML procedures to offer their business in select regions and countries of the world. Of all the exchanges I trade on actively right now, ByBit is the only one that has yet to bend the knee to require full verification. 

Commercial Director Ben Radclyffe confirms that the intention behind the verification program is to function as a “building block” to allow for more services. Only a couple of weeks ago, BitMEX CEO Arthur Hayes, stated that it was time to expand beyond cryptocurrency by creating 100X, which is now BitMEX’s parent company. 

Ramifications and Our Thoughts

The truth is, at some point in time this would have been devastating for the exchange. However, currently, what was severely frowned upon by retail traders has become entirely normalized. 

When it comes to centralized exchanges, having a KYC (know your customer) program is completely normal and exchanges without them are more so the exception, not the rule. This is important to understand when analyzing the retail traders reaction to this, the current normalization will have a dampening effect on their potential rejection of the exchange. 

I believe we will see an acceleration of people leaving the platform as we already see happening as competition in the space has grown immensely, much due to the platforms hit in reputation amongst retail traders.

The question is how substantial impact retail traders have on BitMEX compared to corporate traders and other big-money semi-professionals. Small retail traders will have much bigger flexibility in choosing where to trade, as they are less worried about spread and slippage. 

This means these types of traders are likely the first in line out of the door. On the other hand, big traders will let liquidity dictate where they trade, anything else is basically throwing money down a well. 

I expect ByBit to primarily be presented as the most apparent alternative to use for these retail traders, seeing as they have excellent liquidity and no KYC, so a natural alternative to BitMEX. It would be foolish not to expect an increase in outflow to Decentralized Exchanges as well, which will never do KYC for apparent reasons, they are entirely decentralized after all. 

It’s not all doom and gloom for BitMEX, with the future possibility of offering more services, they could provide new things and compete in brand new market-segments. 

To Summarize:

  • Retail traders will leave at an accelerated pace towards KYC deadline
  • Other exchanges, primarily ByBit, will absorb the exodus from BitMEX
  • Liquidity providers will possibly be affected and transfer focus to other exchanges
  • BitMEX will lose derivative ground to their competitors
  • Increased Interest in Decentralized Exchanges
  • Expect to see them expand their services