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I am specifically asking about the many crypto-currency exchanges which prohibit U.S. traders and would prefer if someone with first hand experience answered. Every exchange which offers derivatives such as perpetuals and futures and many that don't.
I.E. Bitmex, bitfinex, deribit, poloniex(no US margin)
Yes a dual citizen can open account at crypto exchanges using the non-prohibited ID.
At time of writing, crypto exchanges that are not operating as a financial institution (bank, broker dealer, organization legally defined as a financial institution) do not have to deal with FATCA requirements. And US citizens that only have balances of crypto assets on foreign exchanges do not need to file FBAR reports.
https://www.thetaxadviser.com/news/2019/jun/virtual-currency-not-fbar-reportable-201921479.html
The AICPA Virtual Currency Task Force reached out to Treasury’s Financial Crimes Enforcement Network (FinCEN) to help practitioners answer this question. FinCEN responded that regulations (31 C.F.R. §1010.350(c)) do not define virtual currency held in an offshore account as a type of reportable account.
Foreign crypto exchanges are banning US citizens to comply with/avoid a very different set of regulations.
These typically come down to the US regulatory ambiguity around margin requirements, along with the US regulatory ambiguity of the assets they are trading.
Merely making a good faith effort to block Americans absolves them of liability. There is no legal consequence on the citizen for having access, and no legal consequence for the citizen for circumventing a block.
As such, doing whatever you need to do to have a working account on those exchanges is good enough. If you are actually a dual citizen, the answer is yes, you can have an account.
Don't tell them you are an American and don't consistently access from a US IP address.
Financial institutions are subject to additional reporting requirements where they deal with U.S. persons (→ FATCA). Many institutions therefore decline potential customers that are U.S. persons, either because the effort is uneconomical or because they are not allowed by local laws to report that data to the U.S.
U.S. persons are not only U.S. citizens, but any person who could owe taxes to the IRS, e.g. due to U.S. residence.
If you have a dual U.S. citizenship, you are still an U.S. person and will be refused by financial institutions that don't want to deal with FATCA. You cannot use your other citizenship to escape from U.S. person status (unless you renounce U.S. citizenship). You are therefore limited to institutions that do accept U.S. customers.
