Finland-based, peer-to-peer Bitcoin trading site LocalBitcoins has been offering an alternative to online cryptocurrency exchanges since 2012. However, a new change to their policies has social media users seeking alternatives for peer-to-peer crypto trading moving forward.
According to a report by a Reddit user, who posted a screenshot of an error message (pictured below) they ran into while attempting a trade on LocalBitcoins, the site has begun to require the uploading of a government-issued ID to continue trading. The error message appears to indicate the know-your-customer (KYC) and Anti-Money Laundering (AML) verification is only due to the particular trader’s trade volume, with the error message calling the volume “significant.”
The report has since been verified by additional Reddit users in a thread on the r/Bitcoin subreddit titled “So, Localbitcoins started doing KYC/AML,” however, other users imply that the ID verification is necessary even simply to post an ad, regardless of trade volume.
LocalBitcoins has remained a popular option for Bitcoin traders even despite drastically raising fees last June as Bitcoin network fees surged. Requiring ID verification, apparently, is the last straw for many concerned investors.
Comments from upset Reddit users read:
“Sadly with KYC. I don't see the point in local bitcoins now.”
“Terrible news. We need better decentralization exchanges now.”
“This is why it's time for new alternatives to LocalBitcoins.”
LocalBitcoins has not commented on the situation or made any announcements of changes to their policies. Despite a slew of users confirming the sudden appearance of the ID verification requirement, much confusion remains. One Reddit user from Vietnam claims he is not subject to such verification, while another Redditor says that the verification is dependent on jurisdiction, and not required for all traders.
We have reached out to LocalBitcoins for clarification on the matter.