One of oldest cryptocurrency exchanges closes after 10 years in business: What is reason?

LocalBitcoins, one of the oldest cryptocurrency exchanges, has announced it is closing its business after more than a decade in the making. The company reasoned that it can no longer provide its bitcoin trading services due to problems in the cryptocurrency markets.

According to Decrypt.co, the platform also unveiled a timeline for suspending its services, beginning with the suspension of new registrations today and ending with the suspension of trading and deposit taking on Feb. 16. After Feb. 17, LocalBitcoins users will only be able to withdraw cryptocurrency from their wallets. They will have 12 months to do so.

The newspaper notes that LocalBitcoins, judging by messages on the crypto exchange's Twitter page, has until recently been actively developing and continues to release new features, including the launch of the ability to buy bitcoins in one click on January 22. But now, it turns out, things have changed dramatically.

LocalBitcoins was founded by Jeremias Kangas in 2012 in Helsinki, the capital of Finland. With this service, the buyer and seller of bitcoins find each other, and LocalBitcoins keeps the coins in escrow until both parties confirm the transaction.

In 2019, a CipherTrace report revealed that the platform was a major destination for illicit bitcoin transactions. The company has since banned cash transactions on the platform and also introduced the "Know Your Customer" feature, which is now powered by Onfido.

According to Onfido, the exchange has registered and verified users from 189 countries. In 2021, the platform expanded its cryptocurrency exchange offering, giving users access to several altcoins such as Dogecoin and Cardano.

Interestingly, the Russian-language version of the site still trades cryptocurrencies, and there is no announcement of a closure.

 The crypto market under scrutiny

Binance, the world's largest cryptocurrency exchange, recently announced that it will stop accepting and withdrawing funds in U.S. dollars as of February 8. The cryptocurrency exchange did not disclose the reason for the decision and did not specify when dollar transfers would resume. Representatives of the cryptocurrency exchange also added that every effort is being made to resume this service as soon as possible.

After the bankruptcy of the FTX crypto exchange, the cryptocurrency market has come under scrutiny from regulators around the world. Jean-Paul Servais, the new president of the International Organization of Securities Commissions (IOSCO), said that these platforms will be the focus of regulators' attention in 2023. He also noted that regulation of cryptocurrency platforms could be based on the same principles that apply to other areas of the conflict-of-interest economy.

Notably, although the cryptocurrency market has existed for quite some time, many countries around the world still have not developed rules to regulate it. However, the FTX bankruptcy, which affected millions of investors and caused billions of dollars in losses, is forcing a change in the approach to regulation in this sector.

IOSCO, which coordinates regulations in the G20 and beyond, said it has already approved principles for regulating steiballcoins and will now turn its attention to the platforms that trade them.