Bitcoin Volume Drops Sharply following KYC Implementation! Bitcoin Volume drops sharply for LocalBitcoins, the oldest peer-to-peer trading platform.
In the week ending September 28th, the platform handled nearly $61 million in bitcoin trading volumes across the globe. This past week, that number has plunged to $37 million.
The culprit seems to be strict anti-money laundering (AML) and know-your-customer (KYC) requirements across the globe. The Finnish platform, operating since 2012, announced a tiered policy in June that became enforced on the first of this month.
“To accounts, i.e. users who have only onboarding verification, can complete buy trades but will not have a LocalBitcoins receiving wallet address neither be able to sell BTC and post ad,” the platform said.
That suggests to account users that they will be unable to do anything but place buy orders which cannot be completed since there’s no Bitcoin address. This means that everyone has to complete Tier 1 of their tiered policy to buy bitcoins. This means everyone needs to provide an ID, a physical address, and KYC information.
This is fairly easy for residents of a Western country, but there are many countries where it’s impossible or very difficult to provide an address. Albania, as an example, is a medium-rich country, a European country, yet has no “mail” as it is understood in the west.
Another example would be Africa where it is common for roads not to have any names at all. Houses having numbers or zipcodes are also a rarity.
Western-centric AML requirements is stopping honest people wanting to escape inflation, seizure, and the opportunity to purchase Bitcoin.
Most exchanges have a limit of $10,000 to comply to KYC requirements – however, this is an example where it seems like even a $50 dollar purchase of Bitcoin is requiring documentation. Furthermore, it seems like a physical address is needed for those small purchases.
Anyone wanting to buy more than $20,000 a year needs to provide official proof of the address in their name – which again, makes it impossible to do for more than half of the world.
Talks of decentralizing LocalBitcoins has emerged – the idea of using smartcontracts, popular with Ethereum but not impossible with Bitcoin, has steamed ahead. Potential problems would be how complex the smart contract would have to be – especially if the buyer and or seller fall through with their “agreement”.
There are centralized alternatives to LocalBitcoins for Ethereum and BCH. But whether or not those platforms will survive as they’re seemingly backed into a corner for AML and KYC requirements is yet to be seen. But one thing is clear – LocalBitcoins’ future is in question as volume on the platform continues to fall.
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