Localbitcoins Prepares to Implement New User Verification Rules

P2P cryptocurrency exchange Localbitcoins is readying to implement new requirements for user identity verification. The firm recently announced that it is cooperating with Finland’s regulatory agencies on the implementation of the new EU AML rules.

Localbitcoins published a statement on its website this week, elaborating the necessity of the upcoming changes. The 5th Anti-Money Laundering Directive (5AMLD) enforced by the European Commission last July covers cryptocurrencies. Per Localbitcoins, 5AMLD, or Directive 2018/843 of the European Union, also covers custodian wallet providers and crypto exchange services.

EU member states are given until January next year to transpose 5AMLD requirements into their legal frameworks. Finland has already drafted new legislation on crypto services amending the Anti-Money Laundering Act of the nation in accordance with the European directive.

The announcement states that Localbitcoins was a pioneer in advising Finnish regulatory agencies in the process and adapting to the latest compliance standards relevant to the crypto sector. The Helsinki-based firm thinks its mission is to “bring Bitcoin everywhere.” It notes that “by being a reference in compliance, we also aim to promote trust, legitimacy and maturity in the Bitcoin ecosystem, while paving the way for it to become a more viable and widespread currency and combating criminal use of Bitcoin and its network.”

The Localbitcoins team believes the new measures will deliver “significant benefits” to users by preventing fraud and encouraging a safer trading environment. Exact legal requirements are still under preparation, but the exchange informed its customers that they will introduce “major changes” on how cryptocurrency trading platforms operate.

“The most important changes concerning Localbitcoins’ users will be related to improving the registration of new accounts and the identity verification processes, introducing wallet withdrawal and trade volume-based verification tiers,” the firm detailed.

The Finnish firm added that it is smoothening the transition for clients who utilize its services legitimately and are compliant with their terms. Localbitcoins has long been a benchmark platform among P2P crypto exchanges. It connects sellers and buyers of digital coins worldwide on a geographical basis enabling crypto purchases via an escrow system.

Founded in 2012, Localbitcoins gained popularity among cryptocurrency traders who were able to exchange cryptocurrencies anonymously. A couple of years ago, however, the firm launched a feature enabling users to upload their IDs voluntarily.

Later, individuals who traded huge amounts of Bitcoin were reportedly requested to provide a copy of an ID document. The platform updated its terms of service last spring because of the new EU regulations. It added identification requirements in particular situations.

In recent years, numerous P2P and decentralized cryptocurrency exchanges have emerged, including Hodl Hodl, Paxful, Coinffeine, Bitsquare, and Bisq.