LocalBitcoins Pulls Peer-to-Peer Cash Payments Due to Anti-Anonymity Regulations
Over the past months, the service has moved to comply with anti-anonymity regulations, ending the markets for multiple currency cash payments.
LocalBitcoins, one of the best-visited OTC trading services for Bitcoin (BTC), has removed the option of local trades for cash through in-person meetings, the staple activity that brought popularity to the platform in its early days.
Social media users noted the lack of cash options for some regions. Later, LocalBitcoins announced it had stopped advertising the cash OTC services, to comply with European know-your-customer laws:
LocalBitcoins announced that due to being founded and headquartered in Finland, the firm decided to comply with European regulations before November 2019. This includes mandatory account creation and the loss of opportunity for anonymous or pseudonymous trades. LocalBitcoins offered the option of facilitating in-person trades through the added security of an escrow account.
LocalBitcoins still works with various forms of digital payments, but now lacks the anonymity of direct cash payments.
Reports on restricting cash deals have also appeared from India, where the move matches the general direction to decrease the usage of cash:
Reddit users also noted that the service was becoming less transparent and more restrictive lately. However, the trading volumes are still robust, especially in South America. Until recently, LocalBitcoins itself pointed out the role of BTC moving into the economy of Venezuela:
LocalBitcoins sees competition from other services, and now has no advantage over full KYC exchanges. Larger market operators like Binance are also offering fiat purchases and even the usage of debit cards. Social media users are also becoming more skeptical, due to the potential for increased scrutiny, especially for US-based buyers and sellers.
Alternatives to LocalBitcoins include the Paxful service, as well as HodlHodl and BisqNetwork. Still, those types of services remain relatively risky and are selected for adding a layer of anonymity.
KYC procedures are becoming a must even in the cryptocurrency space. Exchanging some BTC is possible though with significant restrictions on volumes.