The LocalBitcoins exchange service has introduced new requirements for user verification. A popular, peer-to-peer Bitcoin exchange based in Helsinki, Finland, continues its compliance initiatives with the addition of transaction analysis tools from Elliptic.
According to its representatives, this was done so that the Finnish Stock Exchange could meet the requirements of the 5th EU MLAI and prevent illegal operations. Elliptic will help LocalBitcoins automate related procedures. It is believed that with this method the exchange can save both time and funds, since there is no need to manually verify transactions. This was announced by Tom Robinson, co-founder of Elliptic.
According to him, Elliptic is already working with several peer-to-peer crypto-exchanges, and is actively negotiating with others. He refused to clarify their names, and judging by the consequences for LocalBitcoins, the refusal to give out this information was quite justified, since the volume of transactions on the exchange immediately decreased significantly, which allowed their closest competitor Paxful to overtake them.
Previously, LocalBitcoins was popular as a platform for anonymous Bitcoin exchange, but last year it tightened the requirements for customers. Elliptic said that the exchange continues to receive assets of criminal origin. According to them, a decrease in the flow of assets from black markets to peer-to-peer exchanges was an obvious consequence of their introduction of customer identification and anti-money laundering mechanisms. Robinson added that criminals will now think twice before trying to withdraw money through a major peer-to-peer exchange.
Does security purpose meet these requirements
Earlier, at the beginning of autumn 2019, LocalBitcoins expanded its requirements for users in accordance with the KYC and AML verification procedures and, as a result, limited the possibility it is necessary for its users to maintain confidentiality. According to a blog post published on June 18 of the same year, the exchange began to cooperate with the Onfido company, which does not care about technical identity, and plans to create a new system of accounting records.
Depending on the amount that the user is operating on the exchange, he will have to provide data about how his best personalities. For example, if the customer’s total volume of trades does not exceed 1000 euros, it will be necessary to provide name, country of residence, e-mail address, and phone number. Users who exceed this threshold will need to be verified after the full KYC process, which requires the submission of a passport or other document that is authenticated.
If the crypto trading threshold of 20,000 euros is exceeded, you will have to go through an additional ID check and confirm the country of residence. Upon reaching the € 200,000 mark of the annual turnover of cryptocurrency exchange on LocalBitcoins, you will have to provide documents on the payment of taxes, as well as the origin of the user’s cryptocurrency. This measure selected and directed as if to protection from fraudsters.
How much does the KYC requirement affect the operation of peering exchange? Most crypto enthusiasts have turned out to be paying attention to the fact that refusing to work with personal funds and introducing the KYC principle pi al changes the character of LocalBitcoins. This service is no longer local, de-centralized and does not express the nature of the Bitcoin. LocalBitcoins is now a nightmare of a Bitcoin holder, a dream of a tax service and generally became unsuitable for use.
Help yourself to protect your finances with Bitcoin mixer
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