Another Exchange Bites The Dust - Localcryptos Announces Closure.

[Fivestar4everMVP]

A peer to peer(P2P) cryptocurrency exchange known as Localcryptos have announced that they are shutting down operations, citing anticipated downtrend in cryptocurrency market as one of their reasons, they also mentions something about health issues which I personally think is understandable....

But shutting down a crypto currency exchange business solely because of a bear market, do you guys think that's ideal?
I mean, were they expecting Bitcoin and cryptocurrencies in general to keep going up and up and never down for whatever reason???

This and many more questions popping up in my head after reading their Announcement.

What do you guys think.?

[Little Mouse]

Though localcryptos didn't require KYC(did they?), I'm sure most of the users had no problem going through KYC. There are a very small amount of people who care about privacy and don't want to hand out their data to other people.

Why am I bringing this here?
Well, we all know Binance had introduced P2P transactions followed by Kucoin and so many other exchanges which allow people to easily buy/sell crypto to fiat without waiting more than a few minutes. It's almost instant, very rarely face any issue.

The above P2P system has done a lot of changes in the local crypto to fiat business. I, for example used to trade BTC, USDT and some coins for fiat. Used to buy at lower rate while sell with a little profit. It would still give me a good amount of profit. But when P2P was introduced, it changed drastically. People barely come to me for buying/selling crypto. They have Binance, Kucoin etc exchanges. Only people who was always concerned about their privacy, used to knock me for buying/selling BTC/USDT.
Don't you think it has an affect on localcryptos too and so does to all other such exchanges? I think yes.

Edit- Thread should be moved in Service Discussion.

[Fivestar4everMVP]

Edit- Thread should be moved in Service Discussion.

I was actually confused as to where was right to post the thread, at first I wanted to post it in the Economy board, but on a second thought, I said no since it had nothing to do with the economy of a country or bitcoin, I thought of scam and accusation - but the exchange has not scammed anybody yet.
At last, I thought reputation board was the best board for it since it's their(Localcryptos) reputation they've tarnished.

Anyways thanks for the heads up bud, moving it to service board now.

[o_e_l_e_o]

There is already a discussion about this here: https://bitcointalk.org/index.php?topic=5418010.0. The general feeling there is that it is likely regulatory pressures which have forced them to close.

Though localcryptos didn't require KYC(did they?), I'm sure most of the users had no problem going through KYC. There are a very small amount of people who care about privacy and don't want to hand out their data to other people.

This is not the case at all. The biggest selling point of LocalCryptos was that they did not require KYC, and were a true peer to peer exchange. Binance P2P is not peer to peer at all. It calls itself P2P as a marketing gimmick, but you are trading through a centralized third party (Binance), who collect your info, monitor your activities, and spy on your transactions.

I've never understood why anyone would ever use Binance P2P. It takes all the disadvantages of a centralized exchange (zero privacy, zero security, zero custody of your coins, constantly being monitored, can have your coins seized at any time, etc.) but with none of the advantages of instant orders or trades.

There is an ever growing market for real peer to peer trading, without Binance or Big Brother holding your coins for you and telling you what you can and cannot do. Bisq is the best platform to use.

[mk4]

Unsurprising, really. They either shut down, or require AML/KYC — in which if they did, they wouldn't really be any different than localbitcoins lol. I wouldn't be surprised if HodlHodl becomes next.

[logfiles]

I wouldn't be surprised if HodlHodl becomes next.

They could be. In fact, I think they will most likely follow the localbitcoins" path by just amending their terms and conditions. Localcryptos never talked of KYC/AML in their terms of service, but HodlHodl has some clauses in their TOS (https://accounts.hodlhodl.com/pages/terms_of_service)

Identification and Verification

If we are obliged to do so by the law or in accordance with our internal policy, we may at any time introduce or amend mandatory identification / verification procedures and require you to complete our identification and/or verification and may also require you to submit identification documents to Hodlex Ltd. Failing to complete identification and/or verification will be considered a violation of the Agreement and may lead to the suspension and/or termination of your account.

[mk4]

They could be. In fact, I think they will most likely follow the localbitcoins" path by just amending their terms and conditions. Localcryptos never talked of KYC/AML in their terms of service, but HodlHodl has some clauses in their TOS (https://accounts.hodlhodl.com/pages/terms_of_service)

Identification and Verification

If we are obliged to do so by the law or in accordance with our internal policy, we may at any time introduce or amend mandatory identification / verification procedures and require you to complete our identification and/or verification and may also require you to submit identification documents to Hodlex Ltd. Failing to complete identification and/or verification will be considered a violation of the Agreement and may lead to the suspension and/or termination of your account.

Interesting. As far as I know they might as well just close though lol because adding AML/KYC will be the end of them; well, unless they actually find a way to be better than LocalBitcoins. LocalBitcoins is simply far ahead in terms of userbase.

[Darker45]

They could be. In fact, I think they will most likely follow the localbitcoins" path by just amending their terms and conditions. Localcryptos never talked of KYC/AML in their terms of service, but HodlHodl has some clauses in their TOS (https://accounts.hodlhodl.com/pages/terms_of_service)

Identification and Verification

If we are obliged to do so by the law or in accordance with our internal policy, we may at any time introduce or amend mandatory identification / verification procedures and require you to complete our identification and/or verification and may also require you to submit identification documents to Hodlex Ltd. Failing to complete identification and/or verification will be considered a violation of the Agreement and may lead to the suspension and/or termination of your account.

Interesting. As far as I know they might as well just close though lol because adding AML/KYC will be the end of them; well, unless they actually find a way to be better than LocalBitcoins. LocalBitcoins is simply far ahead in terms of userbase.

It's actually one thing to run a business and make profit and quite another to advocate and even fight for decentralization. And it is crystal clear with platforms such as LocalBitcoins and HodlHodl that they prioritize business over peer-to-peer transactions so that when the time comes when they would be forced to choose whether to implement KYC and continue operating or stand strong with their principles and close shop, they wouldn't think twice of abandoning their principles.

And if it is true that Localcryptos is closing due to regulatory pressures, it is indeed a good death. That'd be better than having a bad life.

[bittraffic]

Though localcryptos didn't require KYC(did they?), I'm sure most of the users had no problem going through KYC. There are a very small amount of people who care about privacy and don't want to hand out their data to other people.

Why am I bringing this here?
Well, we all know Binance had introduced P2P transactions followed by Kucoin and so many other exchanges which allow people to easily buy/sell crypto to fiat without waiting more than a few minutes. It's almost instant, very rarely face any issue.

Very true. When the market looks a bit like regulated already, people sees there is no need to hide from the law after all its been accepted openly by many merchants even the Paypal and some credit cards are joining the massive adoption of crypto. Buying thru credit cards was even considered by those people as there are option of this on exchanges.

It already felt like the DEX is losing the battle. But of course, there are privacy concern people which is why Tornado was sacntioned.

[Husires]

Is KYC mandatory for such services? Localcryptos do not provide financial services directly between the parties, but act as an intermediary.
Sooner or later you will need to host exchange service yourself and the developers have to hide their identity and perhaps the conversion will be the preserve of Monero.

[logfiles]

Is KYC mandatory for such services? Localcryptos do not provide financial services directly between the parties, but act as an intermediary.

Governments don't care if they are just intermediaries, so long as it involves their fiat. If you are the creator of such a service, and they get to know you, but you refuse to bow down to their demands. They will start accusing you of "facilitating money laundering" and before you know it, you are behind jail.

I think you know how Tornado cash story played out, though it's not directly similar to this case.

[mk4]

Is KYC mandatory for such services? Localcryptos do not provide financial services directly between the parties, but act as an intermediary.

If AML/KYC wasn't mandatory — then chances are, LocalBitcoins didn't make AML/KYC a mandatory requirement knowing how much of a decrease they would get in terms of user base hence revenue.

[NotATether]

Is KYC mandatory for such services? Localcryptos do not provide financial services directly between the parties, but act as an intermediary.

If AML/KYC wasn't mandatory — then chances are, LocalBitcoins didn't make AML/KYC a mandatory requirement knowing how much of a decrease they would get in terms of user base hence revenue.

LocalBitcoins' problem is requiring people to use an obscenely difficult live KYC interview in what they call "special cases" which really just means "randomly, at any time" (with higher probability if you are from an unfriendly country). It is so difficult that there are even entire YouTube videos with tips on how to pass it smoothly.

[PX-Z]

But shutting down a crypto currency exchange business solely because of a bear market, do you guys think that's ideal?
I mean, were they expecting Bitcoin and cryptocurrencies in general to keep going up and up and never down for whatever reason???

Probably, yes, there are a lot of them already, actually that's the most reasons why exchanges halt their operation aside from regulatory compliance. That is 60k to 18k in just few months after all.

Many don't expect that it will go worst just like this. I mean anyone in crypto space knows the volatility of bitcoin but seems like the current situation is too much for them to bear.

[The Cryptovator]

It was one of the exchanges who doesn't require KYC to exchange cryptocurrency. It was perfect for those who like their privacy. But lately, many centralized exchanges start p2p trading like Binance which has become the most popular nowadays. Very rarely do people think about privacy and they feel Binance is safe. So other p2p exchange losing their users. There are many things related to exchange which includes some cost as well. If the company can't generate revenue then it can't sustain for a long time.

[o_e_l_e_o]

It already felt like the DEX is losing the battle.

I disagree. DEXs have never been more important. Look at the crazy amount of KYC that centralized exchanges now implement. CEXs already censor users and don't let them withdraw their coins to addresses they or their government don't like. The latest thing being pushed is that you have to start KYCing your own wallets to be allowed to deposit or withdraw from CEXs at all. The next step after that will be that governments will implement a set of whitelisted addresses which are the only places CEX users are allowed to send their bitcoins at all. Soon using bitcoin via a CEX will be little different to using fiat via a bank.

The demand for real DEXs such as Bisq will only continue to grow over time as CEXs become ever more draconian and ever more like fiat banks.

Many don't expect that it will go worst just like this. I mean anyone in crypto space knows the volatility of bitcoin but seems like the current situation is too much for them to bear.

Even Coinbase got caught out by the bear market and had to lay off 20% of their staff. Although I agree it seems incredibly naive of crypto companies to not be prepared for the inevitable bear markets. And a drop to $20k isn't even that bad. Wonder how many companies would have gone under if we had dropped to $3k like we did last time.

[buwaytress]

It was always a struggle using them (I find the same liquidity issues with Bisq) but I always thought they were slowly building up on momentum, this despite crypto winter. But I think more and more informal p2p (using myself as example) is happening, with trusted channels outside these platforms opening up after initial trades. That's how it happened for me anyway, LBC, Localcryptos, you find a few traders you like and trust, and then we take it all off-site/channel.

The demand for real DEXs such as Bisq will only continue to grow over time as CEXs become ever more draconian and ever more like fiat banks.

Yup, I always feel that regulations squeezing in on exchanges and shutting out users would lead to eventual p2p rally (I would like to say Iran for example), but perhaps it needs MiCA to come into enforcement in 2024 to see a revival in Europe.

[livingfree]

OMG.

This platform was always been suggested by many that likes P2P transactions and no KYC required. It's sad that they have to shut the service down and whatever reason they'll say mainly for this closure.

It's for sure has something to do with two things:

1. Bear market.
2. Regulators.

[dkbit98]

I disagree. DEXs have never been more important. Look at the crazy amount of KYC that centralized exchanges now implement.

This is true but not all DEX are created equally.
If you have so called dex exchange built on top of censored centralized blockchain like ethereum, that is not really decentralized exchange in any way.
Imagine already having over 60% of ethereum blocks being OFAC Compliant and someone is still trusting exchanges built on top of this crap.

Yup, I always feel that regulations squeezing in on exchanges and shutting out users would lead to eventual p2p rally (I would like to say Iran for example), but perhaps it needs MiCA to come into enforcement in 2024 to see a revival in Europe.

Europe first needs to survive this winter and next year 2023, but I think we are going to see lot of changes in this space soon.
Some people like FTX owner Sam is even calling for more centralization, and we could see strict split in community in two or more parts.
One side would only use centralized kyc exchanges, others would only do free p2p trading, and regulations could change in drastic way because they are seriously starting with CBDC's next year.

[bbc.reporter]

There is already a discussion about this here: https://bitcointalk.org/index.php?topic=5418010.0. The general feeling there is that it is likely regulatory pressures which have forced them to close.

However, in reality it might really be Localcryptos could not compete against those exchanges mentioned that created their own peer to peer marketplaces. For the owners, it might be what would be the reason to continue the service, if they know they will be bankrupt within 2 years? It might be better to close the business and get something than to keep going until they are in debt.