LocalBitcoins, the popular Bitcoin exchange site, has said that it will introduce a new raft of identity requirements and other restrictions in response to the latest anti-money laundering rules. LocalBitcoins explained in a blog post Friday that the 5th Anti-Money Laundering Directive (5AMLD), enforced by the European Commission in July 2018, covers virtual currencies, hence their need to comply. 5AMLD, officially known as Directive 2018/843 of the European Union, also includes cryptocurrency exchange services and custodian wallet providers in its scope.
LocalBitcoins Toes the Line
LocalBitcoins claims in its blog post that it has been “a pioneer in advising the regulatory agencies in this process” ,as well as “adapting to the new standards of compliance for the cryptocurrency industry”. The website has been under pressure in recent years to do more to curb anonymous Bitcoin trading, with many law enforcement agencies claiming that it has facilitated the trading of Bitcoin gained through illegal means. In fact, many of the Bitcoin-related cases going through US courts at the moment involve agents using LocalBitcoins to locate, track, and ensnare illegal traders.
LocalBitcoins’ method of face-to-face transactions used to be one of the few ways people could trade Bitcoin when they first started in 2012, but since the growth of quality exchanges this manner of exchange is being used less and less. The site still plays an important part in places like Venezuela however, where online purchasing and selling is prohibited, or at least heavily restricted. As a result, 2018 saw a 584% rise in the amount of Bitcoin changing hands in Venezuela.
Exact Changes Unknown
The site has clearly heeded the warnings given to it in the past, stating that “…by being a reference in compliance, we also aim to promote trust, legitimacy and maturity in the Bitcoin ecosystem, while paving the way for it to become a more viable and widespread currency and combating criminal use of Bitcoin and its network.”
Whilst it is not yet known exactly what form these new measures will take, LocalBitcoins did reveal that there would be “major changes” that would bring “significant benefits” to users. How these changes will go down with users won’t of course be known until they go live, and LocalBitcoins will be hoping the tough new measures don’t frighten them away.