Peer-to-Peer Exchange LocalBitcoins Updates ToS, ID Verification “May Be Required”

  • Peer-to-peer bitcoin exchange LocalBitcoins has recently revealed it’s updating its Terms of Service on May 25.
  • Per the company, its updated ToS mean users may be required to verify their ID with the company in specific situations, including if they are under investigation or trade over certain limits.

Peer-to-peer cryptocurrency exchange LocalBitcoins has recently updated its Terms of Service (ToS), in a move that may see the company ask users for their IDs in specific situations, effectively compromising anonymity.

According to the company’s updated ToS, the company may enforce ID verification “in some situations,” which include the detection of authorized access and account recovery as, presumably, security measures.

Other situations in which LocalBitcoins may ask its users to verify their ID include “trading over certain volume limits,” fraud investigations, and allowing users to advertise on the platform. The company’s post reads:

“It is our top-most priority to ensure that LocalBitcoins is a safe and securebitcoinmarketplace [sic] and that no one is able to use our service for money laundering or other unlawful activities. Most fraud on LocalBitcoins stems from users attempting money laundering. 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.”


LocalBitcoins was founded back in June 2012 in Finland, and has been one of them most popular peer-to-peer bitcoin trading platforms since then. Its users have been able to use the platform in a somewhat anonymous manner, as no ID verification was necessary. While the platform gave users the ability to verify their IDs so other users would trust them, it wasn’t a requirement.

Notably, this year various traders who claim to have been trading “significant” amounts of BTC were reportedly asked to verify their ID with the company in order to keep using its platform. Over time, various LocalBitcoins traders have been arrested for various reasons, including running unlicensed money services businesses and money laundering.

In light of these developments, various users on Reddit speculate remaining anonymous on the platform will no longer be possible once these changes come into effect, on May 25. The changes are partly based on the European Union’s General Data Protection Regulation (GDPR), a regulation brought forth to limit data harvesting, and allow users to own their identity rights online.

The peer-to-peer exchange will now also require individuals to only have one account. Those who are under 16 years old will no longer be allowed to use the platform.

Notable Bitcoin Trader and Whale Not Bullish on the Hyperinflation Narrative

Colin Muller

Highly regarded Bitfinex trader and crypto whale J0E007 is not banking on the hyperinflation narrative, which is a highly popular notion in the cryptoasset industry, implying it's a fairy tale.

Screenshot from 2020-05-26 13-23-22.png(source: Bitfinex pulse)

This narrative, exhibited for example here, proposes that the aggressive fiscal and monetary intervention on the part of many central banks around the world will eventually lead to sharp devaluations in the values of many fiat currencies—and most importantly of the U.S. dollar.

Propagation of this concept of rampant fiat inflation in the cryptoasset space is generally tied to predictions of a huge increase in the price and/or market capitalization of Bitcoin and other cryptos, although most focus on the flagship cryptocurrency.

A Little More Complicated

In his post, JOE007 linked to a recent report from Alhambra Investments, an asset management and financial research outfit.

The report details lead analyst Jeffrey Snider’s view that the dollar is not going anywhere in terms of demand, although definitely not by virtue of the competence of the U.S. Federal Reserve in handling the unfolding economic crisis lit by COVID-19.

Conceptually, first, any strong desire to hold expensive dollar liquidity buffers is drawn from serious mistrust of systemic conditions – including the central bank’s place in them. If you thought Jay Powell well prepared in advance with effective countermeasures standing at the ready, buffers of any size need not apply.

Jeffrey P. Snider

In short, Snider contends that the Fed under chair Jay Powell has not responded appropriately to the emerging crisis with “effective countermeasures at the ready”; and this bungling in turn has led to a higher international demand for US dollars in order to sit on a larger and safer cushion of “expensive dollar liquidity buffers.”

A complicated subject, to say the least. The upshot for J0E007 being that the dollar-collapsing narrative may have some big holes in it—removing the keystone of that popular Bitcoin use-case narrative.

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