Regulatory Compliance? LocalBitcoins Bans Iranian Users

Wilfred Michael 

Wilfred Michael

News reporter

24 May 2019,
10:55
Regulatory Compliance? LocalBitcoins Bans Iranian Users

Iranian natives trading Bitcoins on the peer-to-peer cryptocurrency exchange, LocalBitcoins started the week on an ugly note after the platform cut them off without an official notice of ending support for the region.

The news first spread through Telegram groups, shortly before the exchange disabled its page for Iranian users. If you visit the website, you’ll be greeted by the following message,

“Unfortunately LocalBitcoins is currently not available in your selected region. Please look for another location or come back later”.

A message that LocalBitcoins also sent to a user who contacted it regarding the development confirms the ban, adding that users with accounts on the exchange can withdraw their funds but will not be able to trade on the platform.

Again, the exchange did not explain the reason for cutting off users with the only clue being a reply to several users on Twitter mentioning “risk-based” purposes. What risks?

In a March update, Stmarket.co reported that Finland, the country where LocalBitcoin operates from, rolled out regulatory requirements for cryptocurrency exchanges.

LocalBitcoins subsequently revealed that it will comply with the new directives which included the introduction of a new registration process that would make the platform more secure.

Although the exchange did not at that time mention a possible ban on Iranian users, it is likely that the regulatory requirements took into consideration the U.S sanctions against the Islamic nation.  Also, the fact that the Iranian Bitcoin trading volume on the exchange surged in the weeks leading up to the ban also seems to suggest that it was a regulatory compliance move.

For crypto traders in Iran, the ban is a significant blow since prices on local exchanges are usually high with order books not so large to fill the bulk demands traded on peer-to-peer platforms like LocalBitcoins.

Trading on anonymous, decentralized exchanges would now be the only possible option for Iranians as crypto continues on the path to solving the problem of geographical exclusion.

 

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