A peer-to-peer (P2P) cryptocurrency exchange is an online marketplace that connects buyers and sellers of cryptocurrencies like Bitcoin (BTC). The platform enables them to conduct direct business with one another without the need for intermediaries.
When purchasing cryptocurrency on a P2P exchange, a buyer transfers the agreed-upon amount from their account to the seller. The payment is not made between a consumer and a money services company but between two distinct customers.
P2P exchanges were once the lifeline of the crypto ecosystem, owing to the ease of exchange and privacy features that these platforms offered. However, in 2023, some of these key features have driven them to fall under increased scrutiny from regulators.
On Feb. 9, 2023, Finland-based P2P exchange platform LocalBitcoins announced it was closing after 10 years in service. The platform cited tough market conditions owing to the ongoing crypto winter, along with increasing regulatory pressure and declining market share.
The abrupt closure of one of the oldest P2P Bitcoin trading platforms came within weeks of the United States Financial Crimes Enforcement Network (FinCEN) naming the platform as one of the largest Bitcoin counterparties to the Russian-affiliated exchange Bitzlato.
Bitzlato was the target of a significant enforcement action by U.S. officials who accused the platform of violating of Anti-Money Laundering rules and aiding in the evasion of Russian sanctions.
Another prominent P2P Bitcoin exchange platform Paxful, founded in 2015, suspended operations on April 4. The platform cited the ongoing regulatory environment and staff departures as the reason behind its closure. In a Twitter space, CEO Ray Youssef dwelled more on their decision and
Read more on cointelegraph.com