Peer-to-Peer Bitcoin Exchange LocalBitcoins Halts Services in Iran

LocalBitcoins, a Helsinki-based peer-to-peer cryptocurrency exchanges, has recently stopped offering its services in Iran, presumably over U.S.-led sanctions that pressured other exchanges into withdrawing their services from the country.

According to CoinDesk, various LocalBitcoins users started noticing they were having problems posting new trades and updating previous ones, before the firm’s website started showing a message in Iran’s country page stating “LocalBitcoins is currently not available in your selected region.”

A response from the peer-to-peer exchange given to an Iranian user soon started circulating on social media. It saw LocalBitcoins state:

If you have an account already, you will be able to withdraw your bitcoins, but you will not be able to use the platform for trading.

Later on, the exchange replied to several Iranian users on Twitter, stating that its services weren’t available in the country for “risk-based reasons.” The move came as a surprise, as available data shows LocalBitcoins was seeing its trading volume in Iran surge.

According to some the exchange allowed users to trade using their local bank accounts, without the need for an international credit card. As covered, sanctions have seen Iran be get banned from using the SWIFT system.

In response the country ended up launching a gold-backed cryptocurrency called “PayMon” that is based on the Stellar Lumens (XLM) network. The cryptocurrency seemingly hasn’t been mentioned since reports revealed a company called Ghoghnoos and four national banks were cooperating with authorities to produce a system for it.

Currently, Iranian users can withdraw their bitcoins from the website, but are unable to create any new trades. The move sees LocalBitcoins join a number of cryptocurrency exchanges that have withdrawn their services from the country, including Binance, Bittrex, and ShapeShift.

Nevertheless, alternatives exist. These include decentralized exchanges that allow users to trade cryptocurrencies directly from their wallets. While U.S.-led sanctions can pressure exchanges into blocking Iranian users, truly decentralized platforms won’t discriminate based on nationality.

It’s worth noting that earlier this year LocalBitcoins revealed it was working with local regulatory authorities to implement new anti-money laundering (AML) regulations to comply with local standards. In January, the exchange was breached as a hacker managed to steal $28,000 worth of crypto phishing its users.

Top-Tier Crypto Exchanges' Volumes Climb Back to One-Third of Total Market Share

The aggregate trading volume of top-tier cryptocurrency exchanges has increased by 61.2% during the month of January, while the volume of lower-tier crypto exchanges increased 46.4%.

According to CryptoCompare’s January 2020 Exchange Review, the trading volume of top-tier crypto exchanges – those rated AA-B according to its Exchange Benchmark – climbed last month to represent 29.3% of the total trading volume in the space.

The rise is significant as in December, the cryptoasset data provider’s report showed top-tier cryptocurrency exchanges were seeing their trading volumes drop as they lost market share to lower-tier crypto exchanges, those rated C-F. At the time, they represented 26.4% of the cryptocurrency market’s total trading volume.

top tier trading volumesSource: CryptoCompare Exchange Review

The report further found that exchanges that charge taker fees represented 76% of the total volume last month, while those that implement the controversial trans-fee mining (TFM) model represented 22%.

It also found that regulated bitcoin derivatives are still dominated by the CME, whose total trading volumes went up 145.6% since December. Grayscale’s Bitcoin Trust product (GBTC) saw its total trading volume rise 131% since December.

As for derivatives trading on cryptocurrency exchanges, in January OKEx represented the majority of daily derivatives volumes, trading $4.96 billion per day and capturing 31.1% of the total market share. Huobi traded $4.29 billion a day for 26.9% of it, while BitMEX traded $3.13 billion for 19.6%.

Pure crypto-to-crypto exchanges notably represented 75.4% of the market’s trading volume, in a similar proportion to the last two months. The stablecoin space, per the report, is still dominated by Tether’s USDT, as it still represents 94% of the total Bitcoin trading volume into the top four stablecoins.

Decentralized Exchanges Lose Trading Volume

CryptoCompare’s report also addresses decentralized cryptocurrency exchanges, noting IDEX was the largest one in January. It traded a total of $10 million as its trading volume went up 25.4%, and it was followed by Switcheo and Bitsquare. While these platforms’ volumes went up, DEXs as a whole have been losing volume.

dex CHARTSource: CryptoCompare Exchange Review

According to the report they have diminished 88% since early 2019 to now represent a small fraction of the global spot exchange volume. In January, decentralized trading platform traded $17.8 million in total, representing 0.003% of the market. In January 2019, for comparison, they traded $148 million.

Featured image via Unsplash.