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LocalBitcoins has ditched cash trading without breaking a sweat.
The peer-to-peer exchange became popular after it was the first to offer a kind of real-world matchmaking service that allowed buyers to meet with sellers in coffee shops, and the like, and exchange money for bitcoin. But, on June 1, it stopped facilitating cash trading to make it compliant with regulators in Finland, where it is based.
From that moment on, rival exchanges started eyeing up its customers, assuming an exodus from the exchange would soon follow. However, even if some traders have abandoned ship, LocalBitcoins has still seen an overall increase in global trading volume—suggesting a big increase in the demand for bitcoin.
According to Coin Dance, $65.6 million was traded via LocalBitcoins in the past seven days. This is up $5.6 million from the week before, and $13 million the week before that, setting a new record for 2019. Overall, volumes had been steadily increasing since January, which mirrors the increasing price of bitcoin in the same period.
Cash trading is not the only hurdle that LocalBitcoins has presented to its customers. It also introduced know-your-customer (KYC) protocols for traders who meet a minimum amount of trade volume. Considering that many people used the exchange to avoid KYC, this was also expected to put a dent in its trading volume.
Looking at countries individually, there appears to be a clear delineation between countries that had a sudden but short lived interest in bitcoin in late 2017 and those that have been rapidly buying more in recent months. Countries in the second camp—where bitcoin trading volumes are surging—include Argentina, Mexico, Russia, Kazakhstan and Venezuela—all of which are suffering high inflation rates on their domestic currencies.
Given that several other exchanges noticed an uptick in traders moving to their platforms, it is likely that LocalBitcoins did lose custom and trading volume by making its exchange more regulatory compliant. However, these concerns appear to have been overshadowed by a surge in demand for bitcoin, which, for LocalBitcoins, couldn’t have come at a better time.