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Localbitcoins Introduces Strict KYC Mandates Amongst Host of Guidelines to Comply with EU Regulations

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Localbitcoins Introduces Strict KYC Mandates Amongst Host of Guidelines to Comply with EU Regulations

The Wild West Days of cryptocurrencies may soon be a feature of the past, as crypto-trading and exchange platforms are increasingly introducing identity verification features for their businesses, presumably in a big to escape the clutches of legal authorities.  

After a Reddit post in April 2018, which notified high-volume cryptocurrency traders about popular trading platform Localbitcoins asking its users to comply with AML/KYC regulations, led to debate within the community about the platform’s stance on verification, the peer-to-peer exchange officially updated its terms of service on May 9, 2018. Amongst the many changes are mandatory ID verification and a rewritten data privacy policy. As per the website, the terms come into effect May 25, 2018.

Founded in Helsinki in 2012, Localbitcoins is arguably the world’s oldest running bitcoin exchange, allowing for users to anonymously trade the pioneer cryptocurrency both online and in-person, without the use of a government-issued ID.

However, the company introduced an optional verification system in 2016, via Jumio Netverify, that allowed users to upload their state ID as a means to give their account more credibility and in turn, increase their trust ratings. As aforementioned, the verification became a mandate for large-volume traders in April 2018.

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Localbitcoins Adapts to EU Regulation

With the business’ updated terms of service, which the company cites to changing EU regulations in general, and the General Data Protection Regulation in particular, the company aims to “clarify how bitcoin trades are made, advertisements are posted, and disputes are resolved.” However, the invasive data access permissions strike as a rather odd development, as EU’s aforementioned laws serve to protect a citizen’s online exposure to data ownership, alongside limiting data harvesting from websites.

As per the list, users are required to be over the age of 16 while opening an account, and are allowed to only open one account with the exchange. However, the company maintains that ID verification is not enforced on account opening, but states multiple points which require the use of a verified account, such as trading over volume limits, protecting and safeguarding unauthorized account access, and not assuming liability in case of loss of account access.

As per the website:

“It is our top-most priority to ensure that Localbitcoins is a safe and secure bitcoin marketplace and that no one is able to use our service for money laundering or other unlawful activities.”

Verification Processes Important in Building Credibility

The updated policies are an undeniable welcome addition, and cement the place of Localbitcoins as a credible, responsible company. According to the site, the largest number instances of fraud occur from attempted money laundering, and strict guidelines in place, this number is poised to plunge. The website adds:

“We believe that taking a strict stance in this regard is in the interest of our users and important for our brand as a trustworthy marketplace.”

The updated list can be accessed here.

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