The Finnish regulatory agency has revealed that it is making plans to supervise the operations of LocalBitcoins in the country. This move prompted the peer-to-peer crypto exchange to add several identification processes in a bid to improve their AML and KYC requirements.
Finland’s Financial Supervisory Authority (FSA) to supervise LocalBitcoins’ activities
The Financial Supervisory Authority in Finland has revealed that it is currently working on overseeing the operations of LocalBitcoins. The platform is famous for providing peer-to-peer and over-the-counter Bitcoin exchange in several countries across the globe. The company, which is based in Helsinki, became popular a few years ago for allowing crypto traders to purchase and trade BTC in a private manner. Back then, crypto traders could swap their fiat for BTC or vice versa without having to worry about AML and KYC regulations.
However, over the past two years, regulations and new policies in Finland made it very hard for several crypto businesses to carry out trading activities without verification procedures. Last month, the platform notified its customers that they were rolling out changes following the introduction of the 5th Anti-Money Laundering Directive (5AMLD) by the European Union. LocalBitcoins announced earlier this week that exchange supervision that was mandated by the FSA prompted them to put in place stricter KYC and AML regulations.
According to a blog post by LocalBitcoins, the FSA will soon start supervising the exchange. The post further noted that cryptocurrencies in the country would gain legal status due to the Virtual Currency Service Providers (VCSP) Act put in place by the regulators. “[The VCSP Act] should improve Bitcoin’s standing significantly as a viable and legit financial network,” the blog post added.
LocalBitcoin also explained that their development team had introduced a new registration process that would allow users to start trading the very day they sign up. This new system will help them eliminate the creation of phony accounts, a problem that has been plaguing them for a considerable amount of time now.
LocalBitcoins in its statement noted that improved ID verification procedures were requested by some of its users. The founders of the exchange stated that they have put in place four different steps for trading certain amounts of BTC. For corporate accounts, they would have to submit special verification procedures before they are allowed to trade BTC. LocalBitcoins told its users that they would soon be providing details on the different account levels and their verification requirements.
FSA pressurizing other crypto operators in Finland
LocalBitcoins is not the only crypto operator in the country that is facing regulatory pressure from the FSA. A crypto exchange and wallet provider called Prasos Oy recently revealed that banks in Finland are not cooperating with cryptocurrency operators in the country. The CEO of the company, Henry Brade, explained that their operations could be frozen at an instant. “The risk is that we’ll see our last bank account closed before we can get the next one opened — that would freeze our business,” he lamented.
Due to the strong regulations recently enforced, law enforcement officials in the country were uneasy about storing 2,000 BTC apprehended during a criminal case. Treasury rules in the nation note explicitly that government officials are not allowed to save seized cryptocurrencies on a crypto exchange and would have to use cold storage.
Regulators all over the world are rolling out guidelines for crypto businesses to operate as they try to reduce the risks involved in trading the digital currencies, so Finland is not an isolated case. Bitcoin traders in the country, however, now have few options in terms of enjoying verification-free trading following the strict KYC rules put in place on LocalBitcoins. Despite the existence of decentralized exchanges such as Bisq, Barterdex, and Openbazaar that do not have such stringent requirements, these platforms have extremely low liquidity compared to their centralized trading counterparts.