LocalBitcoins is one of the oldest online marketplaces to buy and sell Bitcoin (BTC). Now, the once-anonymous exchange is finally enacting a proper verification process.
Anonymous Bitcoin buying and selling is no more. LocalBitcoins, one of the last places to offer such a service, is officially changing its policy after receiving pressure from the European Union.
The exchange announced yesterday the implementation of new know-your-customer (KYC) measures to satisfy the European Union’s 5th Anti-Money Laundering Directive. The directive came into effect on March 18. Although it is not stated how detailed the verification process will be, LocalBitcoins will nonetheless be forced to sacrifice some anonymity.
Anonymous No More
The new policy is somewhat of a letdown for long-time users of LocalBitcoins.
LocalBitcoins has amassed for itself a legendary reputation for some in the cryptocurrency space. The website has been around seemingly since the beginning, connecting buyers with sellers and helping them meet up in person to exchange bitcoins. The process was, for some, very personal and allowed for people to meet face-to-face to trade cryptocurrencies.
However, this also inevitably meant that the exchange was a target for money laundering. LocalBitcoins was ultimately the only way to meet others to buy/sell Bitcoin in cash. In fact, trading in-person opened up too many uncertainties for regulators; they saw the whole process as a liability.
What’s the Rush?
LocalBitcoins could have waited until January 2020 to implement the changes, since the directive does not kick in fully until then. However, Finland has already accelerated this legislation, which is where LocalBitcoins is based. The over-the-counter (OTC) exchange, in effect, wanted to comply as soon as it could to avoid any issues down the road.
The new EU law has a few stipulations, which will be felt across the cryptocurrency sphere. For example, KYC is more routinely enforced and financial investors can, by mandate, obtain addresses and identities of cryptocurrency owners. Cryptocurrency exchanges and wallet providers must also be registered with the relevant financial regulators of their home countries.
LocalBitcoins is trying to stay ahead of the curve on regulatory compliance — but, to many long-time users of the site, it may come off as a disappointment.
Have you used LocalBitcoins before? Are you disappointed in the policy change? Let us know your thoughts in the comments below!