Peer-to-peer trading of cryptocurrencies has become a lot more popular over the past few months. While centralized exchanges are still the dominant market leaders, OTC trading platforms such as LocalBitcoins and Paxful are gaining popularity. Unfortunately, the success story doesn’t extend to all OTC trading platforms, as CoinTouch was forced to shut down due to new regulation in Europe.
CoinTouch Shuts Down, Effective Immediately
Although CoinTouch is not necessarily the most popular peer-to-peer trading platform in the world, it was still a valuable addition to the cryptocurrency ecosystem. Giving users more ways to trade Bitcoin in a peer-to-peer fashion without dealing with centralized entities is always an option well worth exploring. Unfortunately, the service is no more, thanks to the recent GDPR guidelines in Europe.
To put this into perspective, CoinTouch has always been free of fees. The platform allowed for completely free peer-to-peer trading of Bitcoin. There was also a social aspect, as the platform banked heavily on social connections to get more people excited about cryptocurrencies. This feature used both Facebook and Google accounts to share information regarding one’s cryptocurrency trading.
Additionally, users could set up a direct peer-to-peer trading channel through either Facebook or Google. This ensured that verifying the identity of the other party wouldn’t require any involvement by CoinTouch itself. It is a business model that worked quite well, but it also poses some big problems thanks to the new GDPR regulation introduced in Europe. It is a very unfortunate side effect and one that might impact other trading platforms as well.
For those unaware, the new GDPR requirements could become a major headache for website owners. It is expected that penalties will be levied of up to 4% of turnover – or 20 million EUR – if no KYC procedures are introduced. Since CoinTouch did no user verification of their own, it is safe to say the platform would have been at major risk of being fined for violating these new guidelines. Taking such a risk serves no long-term purpose whatsoever.
CoinTouch’s owner explained the decision to shut down as follows:
This new EU law hurts small website[s] like mine, but helps reinforce the dominance of Facebook, Google and Twitter, who are able to prepare and defend themselves using established legal teams and cash reserves, and who now face less competition from startups. The EU Cookie Law, EU VAT regulation and now the EU GDPR are all examples of poorly-implemented laws that add complexity and unintended side-effects for businesses within the EU.
It seems the same individual is also operating the StreetLend platform as of right now. That service will be shut down for the same reason. While one can commend the EU regulators for trying to eliminate all criminal activity across the continent, GDPR may not necessarily be a solution with which most people are comfortable. For now, the real impact of this new measure remains somewhat limited, but that may not be the case for much longer.