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On Monday, the Helsinki-based peer-to-peer crypto exchange Localbitcoins announced it is adding several different identification processes in order to improve AML and KYC requirements. The move to bolster the new customer verification procedure follows Finland’s Financial Supervisory Authority (FSA) mandating supervision over exchange operations.
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Localbitcoins Adds a New Verification Process Due to Regulatory Guidelines
The BTC trading platform Localbitcoins specializes in peer-to-peer and over-the-counter bitcoin exchange throughout nearly every major city in the world. Years ago, the Helsinki operation was well known for providing a platform that allowed people to trade in a private fashion. In those days, traders could swap fiat for bitcoins or vice versa without the KYC processes involved with other exchanges. However, over the last two years, Finland’s regulations and newly introduced policies have made it harder for many crypto businesses to allow trading without verification. In February, Localbitcoins notified customers that changes were coming due to the 5th Anti-Money Laundering Directive (5AMLD) that was enforced by the European Union. Now, this week, the company based in Southern Finland says the FSA’s new exchange supervision mandate has made it impose even stricter AML/KYC guidelines.
The company’s blog post on March 25 details that Localbitcoins will soon be “supervised” by the country’s FSA. The blog post adds that the Virtual Currency Service Providers (VCSP) Act will provide legal status for cryptocurrencies. “[The VCSP Act] should improve significantly Bitcoin’s standing as a viable and legit financial network,” Localbitcoins announcement notes. The trading platform’s post also explains that the team has launched a new registration process and users will still be able to begin trading the day they sign up. The new system administered will inhibit the creation of phony accounts as well.
Other Finland Cryptocurrency Operators Are Also Experiencing Regulatory Pressures
The news follows the harsh regulations and banking issues Finland cryptocurrency operators have been facing in recent times. The exchange and crypto wallet provider Prasos Oy told the media that Finnish banks will not cooperate with cryptocurrency providers. Henry Brade, Prasos CEO, explained at the time that the company’s operations could be frozen on a whim. “The risk is that we’ll see our last bank account closed before we can get the next one opened — That would freeze our business,” Brade revealed. Moreover, due to the strict regulations, even Finnish law enforcement officials were uneasy about storing 2,000 BTC seized in a criminal forfeiture case. The country’s new treasury guidelines detailed that officials cannot store the seized coins on an exchange and must use cold storage.
Localbitcoins statements this Monday explained that the robust identity verification process was actually “requested by many users.” According to the Localbitcoins founders, there will be four individual tiers for trading certain amounts of BTC volume. Corporate accounts will have to submit a more specialized verification method. Besides the latest requirements, the company has also revealed that “more details on each account level and verification requirements will be announced soon.”
The strict KYC guidelines enforced by Localbitcoins leaves BTC traders very few options for private and verification-free trading besides decentralized trading platforms like Bisq, Barterdex, and Openbazaar. However, liquidity on these particular decentralized applications is still extremely slim in comparison to their centralized counterparts.
What do you think about Localbitcoins being supervised by Finland’s FSA? Let us know what you think about this subject in the comments section below.
Image credits: Localbitcoins, Shutterstock, and Pixabay.
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