Starting this month bitcoin exchange LocalBitcoins will implement new know-your-customer and anti-money laundering policies for its users. This will directly affect the privacy of its users as the exchange will collect the personal data of its customers before letting them use their services.
LocalBitcoins back in July announced that they are teaming up with Onfido to launch their new verification system. The new verification process is based upon the four-tier system. Users will have to give information based upon how much they trade per year. And users who would trade over 200,000 Euros per year would have to provide their private information, including physical address, phone number, and extra ID verification.
Finland based exchange, when started was among the companies that promoted anonymous trades. But recent crackdown from regulators all around the world might have affected the decision of Localbitcoins. Some reports suggest that the Venezuelan people used the platform to trade over 20 billion bolívars alone in the last month. New verification process would limit the people who use this platform in authoritarian countries.
Privacy among crypto exchanges has always been a topic of debate in the crypto community as many exchanges preach about its importance. But recently regulators all over the world are pressurizing crypto exchanges to collect customers data for security reasons. Many crypto enthusiasts believe that collecting customers personal information defeats the purpose of trading in cryptocurrencies.
Recently FATF also released its guidelines for all crypto trading platforms to combat money laundering and trading finance. And if they are implemented, it would be a huge blow for the crypto community.