LocalBitcoins Bans Iran-based Users But New Options Emerge
LocalBitcoins has cut off services for its users in Iran, with the move coming on the back of trading volumes in rial ballooning on the platform in the last week.
The peer-to-peer (p2p) exchange did not explain the exact circumstances of its decision to shut off services for Iranian users.
However, it is believed the Finland-based platform is acting out of the need to comply with regulatory demands and possibly due to U.S. sanctions. The U.S. has continued to exert pressure on Iran and LocalBitcoins might have acted due to that very pressure.
Telegram channels carried the news of how local traders trying to use the platform had earlier on found it difficult to post new trades while for some, posted trades could not update.
LocalBitcoins reportedly told one user that they could withdraw their bitcoins if they already had an account, “but [would] not be able to use the platform for trading.”
The platform also posted a message on its Iran country page informing users of its unavailability. The notice simply read:
“Unfortunately, LocalBitcoins is currently not available in your selected region.”
The exchange also provided responses to its Iranian users on Twitter, telling several of them that the service wasn’t available in the region (read Iran) “for risk-based reasons.”
The popularity of LocalBitcoins among Iranian bitcoin traders has soared over the years. The main advantage has been that one doesn’t need to worry about being asked for their international credit card details, information that isn’t available to Iranians.
Rather, LocalBitcoins allows its users to complete trades via local payment methods like local bank transfers.
LocalBitcoins also pulled in Iranian users because it offered its users access to escrow services, holding bitcoin until the seller and the buyer finalized the deal and confirmed the transfer of funds.
The ban adds to the challenges facing Iranian crypto enthusiasts, who have already seen a number of top crypto exchanges suspend their services in Iran. These include major crypto exchange Binance, ShapeShift, and Bittrex.
The chief executive of Iran-based fintech Bahamta, Milad Jahandar, has said that LocalBitcoins was among the few options available to Iranian crypto traders. He says that the ban could see fraud cases in crypto-related commerce spike.
Jahandar added that users will now “be forced” to go for person-to-person deals, increasing risks of exposure to fraudulent actors. It also “sets back” Iran’s bitcoin community and hampers mass adoption.
Other than that, Jahandar says the exclusion negates the assertion that Bitcoin is decentralized, especially when the ban is due to political pressure. He said that the ban basically downgrades bitcoin to the level of fiat currencies that are controlled by “borders, colors or ethnicities.”
While LocalBitcoin’s move is tough on Iranian bitcoin users, the situation isn’t entirely hopeless. There are options or alternatives that are attracting vast numbers, including Bisq, Hodl Hodl, and KeepChange.
Bisq is an open-source decentralized p2p platform that reportedly runs on anonymizing protocol Tor. As well as integrating Farsi, Bisq requires no KYC checks. Trades on the site are completed either privately or anonymously, hence popular in a country with heavy censorship.
Hodl Hodl has also integrated a Farsi interface targeting users from Iran, while KeepChange ie eyeing added volume by assuring customers that they won’t bow to any form censorship or be threatened by potential sanctions.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.