Leading peer-to-peer exchange LocalBitcoins stops servicing Iranian users
Peer-to-peer bitcoin exchanges have established themselves as one of the few viable trading platforms for bitcoin investors in less developed or emerging markets. In struggling economies, such as Venezuela, they can even serve as a lifeline for cash-strapped citizens. However, despite the peer-to-peer ethos of these platforms, they are not immune to the geopolitical levers of the state, as Iranian bitcoin users discovered last week.
LocalBitcoins is for everyone, except Iran. In a blow to the burgeoning Iranian bitcoin economy, leading peer-to-peer exchange LocalBitcoins has ceased to provide its service to local bitcoin traders.
On May 24, when accessing the Iranian section of LocalBitcoins, users in Iran were met with the following statement: “Unfortunately LocalBitcoins is currently not available in your selected region. Please look for another location or come back later.”
In an email to an Iranian LocalBitcoins user that has been circulating on social media, the Helsinki-based company stated that its services are no longer available in the Middle Eastern country but did not provide an explanation as to why. The email said that while trading has been disabled for Iranian residents, account holders are able to withdraw their bitcoin holdings.
While LocalBitcoins has not provided a reason for ceasing its Iran operations, US sanctions targeting Iran is the most likely explanation. LocalBitcoins is not the only exchange that does not serve Iranian citizens. Coinbase, Binance, Bittrex, Paxful, and ShapeShift also do not provide services to Iranian residents.
Before the ban, Iranian rial trading volumes on the peer-to-peer platform had been surging alongside the recent bitcoin rally, reaching its highest weekly trading volume since January 2018, according to Coin Dance.
The importance of peer-to-peer exchanges in countries like Iran
Iranian authorities have been restricting access to local cryptocurrency exchanges as part of an ongoing Internet censorship campaign.
While there has been no official statement by the Iranian government on why crypto asset trading platforms are being blocked, Iran’s surging inflation rate, which is expected to hit 40 percent this year, is likely a factor. With Iran’s currency losing value as its economy struggles, it is not in the government’s best interest for Iranians to replacing the rial with bitcoin for payments, as a store of value and to move money out of the country.
As Brave New Coin reported in February 2018, Iran has been mulling over launching its own central bank-issued digital currency. The head of Iran’s Parliamentary Commission of Economic Affairs (IPCEA), Mohammad Reza Pourebrahimi, stated in an interview with Russian media outlet RBC, “IPCEA has already obliged the Central Bank of Iran to start developing proposals for the use of cryptocurrency […] to bypass the use of the dollar, as well as the replacement of the SWIFT system.”
Where can Iranians trade bitcoin now?
While local exchanges have become difficult to access and most leading international exchanges have closed the door on the country’s bitcoin community, there are still options available for Iranian traders.
In the wake of LocalBitcoins’ ‘Iran Ban,’ another peer-to-peer bitcoin exchange, Hodl Hodl, announced in a Medium post that it is inviting Iranian users to use its platform.
The exchange is in the process of translating its platform into Farsi to make it more user-friendly for Iranian users who do not speak English and is enticing Iranian traders to sign up by offering a discount on exchange fees. A Telegram group specifically for Iranian users has also been launched.
Iranians are also able to freely use the popular decentralized trading application Bisq. Bisq comes with Tor integration and has recently translated its platform into Farsi, making it another option for Iranian bitcoin traders. In-person peer-to-peer trading among bitcoin enthusiasts is another viable way to buy and sell bitcoin in Iran.
While LocalBitcoins turning its back on Iran is a blow to the country’s bitcoin economy, its community is alive and kicking. According to a report by Al-Jazeera, a large contingent of Tehran’s bitcoin community met at the 1001 Nights Cinema Pizza restaurant, which accepts cryptocurrencies as a payment method, on Bitcoin Pizza Day.
The restaurant’s owner, Reza Abdollahi, told Al-Jazeera that every month, up to 200 people pay using cryptocurrencies – primarily ether (ETH) – to benefit from the 50 percent discount the restaurant offers to patrons who pay in digital currency.
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