After the peer-to-peer Bitcoin marketplace, LocalBitcoins, quietly removed the in-person cash trades option and cancelled all pending fiat trades, local traders have began scouting for alternatives.
LocalBitcoins, a Finnish-based company, is one of the oldest over-the-counter BTC exchange marketplaces and this move has had a major impact on the overall BTC trading.
In Kenya, and across Africa, LocalBitcoins is the most popular destination for P2P Bitcoin trading and this is already affecting traders who rely on the marketplace to do in-person trades.
A look at the LocalBitcoins stats shows that Nairobi dominates in cash transactions on the platform in Sub-Saharan Africa.
LocalBitcoins AML Regulations and Compliance
While LocalBitcoins has not given a statement on the changes, a blog post on the LocalBitcoins website, dated February 8th, 2019, gives a clue as to the reason behind the new changes.
Part of the blog reads:
“In July 2018, the European Commission brought into force the 5th Anti-Money Laundering Directive (5AMLD) which for the first time takes into consideration virtual currencies. 5AMLD includes virtual currency exchange services and custodian wallet providers in its scope. Even though EU members are given a transposition period until January 2020 for implementing the directive, Finland has already drafted new legislation concerning virtual currency services, amending its AML Act in accordance with 5 AMLD.
LocalBitcoins as a Finnish company has been a pioneer in advising the regulatory agencies in this process and adapting to the new standards of compliance for the cryptocurrency industry. It is LocalBitcoins’ mission to bring Bitcoin everywhere and 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.
The most importance changes concerning LocalBitcoins’ users will be related to improving the registration of new accounts and the identity verification process, introducing wallet withdrawal and trade volume-based verification tiers. We are working to make the transition easy to all users who make legitimate use of our services and already comply with LocalBitcoins’ ToS.”
In light of these changes, traders are already moving to alternatives that offer in-person cash trades, one of which is Paxful. The P2P marketplace, which recently held a number of events in Kenya and South Africa, is offering a ‘local’ service which LocalBitcoins no longer seems in a position to offer.
As traders seek for a more convenient options elsewhere, P2P platforms like Paxful have spared no expense educating and informing traders of other available alternatives.
LocalBitcoins is now Remote Bitcoins. They took down all their cash offers and the refugees are flooding to @paxful VIP support for all Cash vendors! We won’t let you down. Cash is still king in the emerging world!
— Ray Youssef (@raypaxful) June 1, 2019
It is clear that while regulation is slowing down adoption and acceptance of cryptocurrencies, it has not stopped the movement so far. Alternatives like Paxful will likely continue to offer traders a way to access and use cryptocurrencies, both across Africa and globally.
LocalBitcoins has given an update and a note on the removal of local cash ads on Twitter below: