LocalBitcoins has been helping people get into the crypto world for years and is the sole lifeline for those in crisis zones like Venezuela. However, users of the popular Bitcoin marketplace have woken up to a terrifying sight – the option to swap Bitcoin for cash has been removed.
Under the old system, users could meet up in person to swap Bitcoin for fiat cash, but as LocalBitcoins slowly succumbs to the pressures of regulatory bodies more features like this will slowly be removed.
Regulation Killing the Platform
LocalBitcoins might as well rebrand to RemoteBitcoins if removing the Bitcoin for cash option is a permanent move. Cash is still king in the developing world due to the number of people without access to the banking system. By removing the ability for these users to buy Bitcoin with cash, LocalBitcoins is alienating its customers. In fact, as a response Paxful has reduced all in-person Bitcoin for cash transaction fees to 0% until 1st July. If the move is permanent, LocalBitcoins could become another Bitcoin exchange condemned to the graveyard.
Increasing AML and KYC Measures
Due to being headquartered in Iceland, LocalBitcoins has been forced to start adhering to certain KYC and AML regulations. These new practices won’t come into effect until November 2019, but customers are already starting to fear the change. Many customers who opt to use LocalBitcoins do so because they cannot pass KYC and AML due to not having bank accounts or any forms of ID. Once more, LocalBitcoins is alienating its customers.
Cutting Off Iran
Iran’s economy is going through the ringer at the moment, and it’s looking like Iranians will no longer have access to LocalBitcoins. Due to US sanctions, LocalBitcoins have been forced to toe the party line and cut off its services in Iran. News of the impending ban triggered record high trade volume for Bitcoin/IRR – presumably Iranians looking to get their hands on as much Bitcoin as possible before they are cut off.
LocalBitcoins has yet to issue a statement about removing cash trade options, but it wouldn’t come as a surprise if the exchange is being forced to cut the feature due to AML legislation. Unless LocalBitcoins can find a way around the AML legislation, it’s going to lose a lot of users in developing nations who don’t have access to banking.
Could this be the end of LocalBitcoins? Only time will tell…
