There’s a version of buying crypto that skips the usual steps entirely: no exchange account, no identity check by a company like Coinbase, just one person handing another person cash — or feeding it into a kiosk — in exchange for bitcoin. This is often called «peer-to-peer,» or P2P, trading, because it’s just two individuals dealing directly with each other rather than going through a licensed middleman. Some coverage of the crypto industry has suggested this kind of trading is quietly making a comeback. Look specifically at what’s happened across the United States, the European Union, and Canada over the past three years, and that reading doesn’t hold up. Every channel that let ordinary people trade crypto this way — informally, in cash, through a local machine or a company acting as a matchmaker — has come under sustained, escalating pressure from regulators on both sides of the Atlantic and the border with Canada. What’s left standing afterward isn’t evidence of a comeback. It’s the handful of setups that were never run by a company in the first place, and they’re surviving mainly because there’s nothing left for a regulator to grab hold of.
The US Decided a Decade Ago That People Doing This for a Living Are Money Transmitters
Washington settled this question long before most people were paying attention to it. On 9 May 2019, the US Treasury’s financial crimes unit, FinCEN, issued guidance stating plainly that anyone regularly buying and selling crypto for other people — what it called a «P2P exchanger» — counts as a money transmitter under federal law, «regardless of the frequency or formality of the transaction or where the exchanger is located,» unless the activity is occasional and not done for profit. That single sentence turned every regular seller on a site like LocalBitcoins into an unregistered financial business overnight, whether they realized it or not.
Prosecutors had already been enforcing that idea before it was written down. A Los Angeles woman known online as «Bitcoin Maven» got a year in federal prison in 2018 for running an unlicensed cash-for-bitcoin exchange . Around the same time, a man selling bitcoin through LocalBitcoins pleaded guilty after moving hundreds of thousands of dollars through more than a thousand customers without ever registering with the government. A similar case followed in 2021, then another in 2024 that ended with nearly five years in prison for someone converting drug-sale proceeds into cash through an unlicensed exchange in Miami, and a fifth in the same year for the same underlying offense. What connects all of them isn’t the amount of money or even the specific charge — it’s that every single defendant thought of what they were doing as a private side hustle, and the government treated it as an unlicensed financial business every time.
That same legal argument eventually reached the platforms themselves, not just the individuals using them. Paxful, one of the best-known sites for arranging these direct, person-to-person crypto trades, pleaded guilty in federal court on 9 December 2025. The company admitted to running an unlicensed money-transmission business, failing to follow anti-money-laundering rules, and violating a federal law against using communications to further illegal financial activity. For years, Paxful had marketed itself as a peer-to-peer marketplace, something closer to a bulletin board than a financial institution. In a courtroom, it ended up admitting to precisely the kind of offense the government had been warning about since 2019.
Paxful’s slow collapse — a 2023 lawsuit between its co-founders, a temporary shutdown, and a full wind-down by November 2025 — wasn’t simply a business going bust. It was the endpoint of a legal case the US government had been building against this style of trading for years.
It’s worth taking the government’s 2025 policy shift at face value rather than dismissing it — prosecutors really were told to back off unless someone knowingly broke the licensing rules, and to stop targeting exchanges or wallet providers «for the acts of their end users». The timing just happens to undercut how much it matters here: Paxful had already entered its guilty plea before the policy changed, and nothing about a softer approach going forward erases the convictions handed down against individual sellers between 2018 and 2024.
Europe Regulated Its Biggest Direct-Trading Site Years Before Its Main Crypto Law Even Existed
The European Union’s version of this story predates its big, EU-wide crypto law — known as MiCA — by roughly five years. LocalBitcoins, one of the largest sites for arranging direct trades between buyers and sellers, was headquartered in Finland, and Finland moved early. Its Act on Virtual Currency Providers took effect on 1 May 2019, requiring every crypto exchange, wallet provider, and similar business operating in the country to register with the national financial regulator by 18 August 2019. LocalBitcoins cleared that bar. Finland’s regulator didn’t just wave the application through: by November 2019, it had reviewed LocalBitcoins’ anti-money-laundering setup and management closely enough to register the company as one of just five in the entire country to clear that first round.
Passing that test didn’t protect LocalBitcoins from what came next. The bar Finland set in 2019 was much lower than what MiCA would eventually demand once it applied fully across the EU, and the company spent the years between 2019 and its closure in February 2023 absorbing rising compliance costs on top of a shrinking market. When it finally shut down, the company blamed «a very cold crypto winter» , but people who’ve studied the closure point squarely at the growing weight of preparing for MiCA-level requirements — a level of oversight a site built around anonymous, person-to-person matching was never designed to handle.
MiCA’s own text draws the exact line that decides who’s actually exposed to this pressure. One part of the law states that where crypto services are «provided in a fully decentralised manner without any intermediary» — meaning no company is actually running things — they fall outside the regulation entirely. Legal experts have settled on two practical tests for this: no single entity can control how the system works, and users need to be dealing with something closer to open, shared software than a product sold by an identifiable company. A separate rule adds a narrower restriction aimed specifically at licensed companies: they can’t send more than €1,000 worth of crypto to a wallet that isn’t held by another licensed company without first verifying who actually owns that wallet. Both rules bind companies. Neither one has any way of reaching two people trading directly with each other through software that nobody runs as a business.
Canada Is Going Further Than Either — It’s Trying to Ban the Machines Outright
Canada’s approach has moved from registration paperwork to something closer to eliminating an entire way of buying crypto. FINTRAC, the country’s financial-crimes watchdog, requires every business dealing in crypto — including foreign companies serving Canadian customers — to register under federal anti-money-laundering la. Since June 2022, that registration has come with real teeth: rules requiring identifying information on crypto transfers of CAD 1,000 or more, mandatory reports on transfers of CAD 10,000 or more, and a requirement to verify the actual person behind a transaction.
The crackdown that followed has been unusually blunt. In 2026 alone, FINTRAC revoked the registrations of 50 money-services businesses, 47 of them tied to crypto — exchanges, wallet providers, payment processors, and cash-to-crypto machine operators. A look at an earlier batch of 35 revoked firms found that 33 had registered back in 2021, under lighter early rules, and simply never updated their compliance once the 2022 requirements kicked in — becoming non-compliant without necessarily realizing it. FINTRAC doesn’t need to prove money laundering to pull a registration; failing to respond to an information request within 30 days is enough. Roughly 83% of the 2026 revocations hit companies whose registration was still formally valid on paper — meaning most weren’t caught doing anything criminal, just caught falling behind.
Ottawa didn’t stop at pulling registrations. In its Spring budget update on 28 April 2026, the federal government proposed banning crypto ATMs — the machines that let someone feed in cash and walk away with bitcoin — nationwide, outright. Canada has nearly 4,000 of these machines, and it’s also the country that installed the world’s very first one, in a Vancouver coffee shop back in 2013. The government leaned on fraud numbers to justify the move: Canadians reported $704 million in crypto fraud losses in 2025 alone, and more than $2.4 billion since 2022, with both FINTRAC and the FBI flagging these machines specifically as a favorite tool for scammers and for laundering cash from organized crime. A crypto ATM is about the closest thing to a physical, walk-up version of direct buyer-to-seller trading that exists, and Canada is moving to eliminate the category entirely rather than just tighten the rules around it.
The Same Thing Is Happening State by State in the US
That pattern is repeating itself state by state in the US, just less tidily. Indiana passed an outright ban. Minnesota is trying to follow, with a bill that would make it the first state to ban these machines entirely, built on top of 2024 rules — a $2,000 daily cap for new users, mandatory refunds — that lawmakers now say clearly weren’t enough given the FBI’s estimate of $333 million in related losses. New Hampshire took a lighter touch when its new law takes effect in December: a 48-hour hold on a customer’s first transaction, the same $2,000 daily cap, refunds if fraud is reported within two weeks, and a screen that has to warn the customer before they hand over cash. Wyoming and Utah passed their own versions of the same idea this year.
None of this is being driven by worry about privacy or financial surveillance. It’s being driven by fraud, especially against older adults — the same justification Canada used for its own proposed ban. A crypto ATM sits at the exact spot this pattern keeps returning to: it’s run by a real company, sitting in a real, fixed location, and licensed by the state — and precisely because of that, it’s one of the easiest parts of this whole informal trading world for a lawmaker to reach and shut down.
What Actually Survives, and Why
Step back and look at the US prosecutions, Paxful’s guilty plea, Finland’s early rules giving way to something much heavier, and Canada’s move from pulling licenses to floating an outright ban — and they’re all aimed at the same kind of target. A company. A fixed address. A person willing to put their name on the transaction. What none of them can touch is two people trading directly through software that was never built by a company to begin with, which is exactly why that small corner of the market is the one still standing.
That’s the actual reason a small number of genuinely decentralized setups look like they’re holding steady while LocalBitcoins, Paxful, and a long list of individual sellers, ATM operators, and registered companies have gone down one after another across three major regions. It isn’t that demand for anonymous trading surged. It’s that the entire world of company-run, physically located, or brand-name direct trading has been under constant, escalating legal pressure in the US, the EU, and Canada for the better part of a decade — and nearly none of it has survived that pressure intact. What’s left isn’t a comeback. It’s what remains after almost everything else got cleared out, except for the handful of things no regulator has yet figured out how to reach.
SOURCES:
- FinCEN news release (9 May 2019)
- FinCEN Advisory FIN-2019-A002 (PDF)
- DOJ: «Virtual Asset Trading Platform Pleads Guilty to Violating the Travel Act and Other Federal Criminal Laws» (10 Dec 2025)
- DOJ (USAO-EDCA version of same plea announcement)
- DOJ: «Virtual Asset Trading Platform Sentenced for Violating the Travel Act and Other Federal Criminal Laws» (11 Feb 2026)
- STT Info: «The Financial Supervisory Authority Granted Five Registrations as Virtual Currency Provider» (FIN-FSA/LocalBitcoins, Nov 2019)
