Roskomnadzor, the Federal Service for Supervision in the Sphere of Telecom, Information Technologies and Mass Communications of Russia, has officially blocked access to over-the-counter and peer to peer bitcoin exchange LocalBitcoins on September 13, 2016.
The ban on LocalBitcoins came soon after the weekly trading volumes of LocalBitcoins Russia began to surge, rapidly rising from US$900,000 to nearly US$4 million over the past 12 months.
The Russian government imposed the ban on LocalBitcoins without any prior notice, forcing Roskomnadzor to blacklist the domain localbitcoins.com for all Russian users and traders.
“For us, as well as for you, this decision was very unexpected,” said LocalBitcoins.
In response to the ban, the LocalBitcoins team released an official statement on their blog, with an explicit instruction on circumventing the IP blacklist ban by utilizing the TOR browser and VPN to access the site like before.
The exchange named a few premium VPN service networks, including IPVanish, Mullvad and NordVPN with their monthly fees to help LocalBitcoins Russia users to access the platform.
Most if not all Bitcoin trades in Russia are executed using over-the-counter methods due to the unclear regulatory frameworks and policies on Bitcoin and cryptocurrency exchanges in the country. Because of this obscurity in regards to Bitcoin regulations, the majority of Bitcoin users, investors, and traders in Russia rely on over-the-counter and peer to peer trading to purchase or sell Bitcoin.
Thus, the presence and the impact of LocalBitcoins to the Russian Bitcoin market is much larger and significant than other markets globally.
It is still early to speculate the actual motivation behind the Russian government in banning LocalBitcoins as Vladimir Putin and the rest of the government previously expressed their optimism towards the digital currency and minimal operations.
Specifically, NewsBTC reported that Russian political party, the Party of Growth, proposed to legalize Bitcoin. Putin also stated that some forms of Bitcoin trading and operations will be legalized.
Sources: Local Bitcoins, Image Credit: BSB International