LocalBitcoins to Do Away with Anonymity to Comply with Financial Regulations
LocalBitcoins is one of the clearest indicators for organic demand for Bitcoin, but the service will soon include complete user verification.
The LocalBitcoins service will have to comply with European regulations, facing another severe restriction similar to the US market. The service has been instrumental to the growth of investment and adoption, especially in developing markets, and shows a significant demand in South America.
LocalBitcoins, which operates from Finland, will have to comply with local financial regulations, especially matching the requirement for anti-money-laundering (AML) and know-your-customer (KYC) procedures.
The service will have to become fully compliant before November 2019, as it falls under the financial regulations for offering escrow services, or a form of custodial wallet. Since March 18, the service requires account registration with basic information, but there will be additional tiers of account confirmation.
“The new id verification system will introduce 4 individual account levels per trade and BTC transaction volume, that should increase trustworthiness and add distinction to the user profile. Corporate accounts will undergo a separate verification process,” LocalBitcoins clarified in its blog.
The demand for LocalBitcoins rose to a peak at the end of 2017, but ever since then has reserved relatively high levels. Argentina, Chile, Colombia, Peru, and Venezuela show a marked increase in activity in the past months, along with a handful of countries where direct exchanges are a viable option. Surprisingly, there is an uptick of usage in the USA, despite the restrictions for the states of New York and Washington.
LocalBitcoins is also an indicator of the direct inflows of cash in an ecosystem where most of the trading has been taken over by crypto-to-crypto pairs. However, the service remains one of the riskier ways to acquire BTC. Payment options vary depending on the seller, and credit card usage is rare due to fears of attempting to roll back the cash transaction, while the BTC transaction remains permanent.
The usage of LocalBitcoins shows that the leading coin is still in demand for personal small-scale investments. BTC is still more in-demand compared to the direct acquisition of altcoins, and still has a significant fiat on-ramp through the peer-to-peer service.