Paxful, the North American P2P Bitcoin trading service provider, is exiting the lucrative Venezuelan market according to an email shared with its clients on September 15. The firm notified its Venezuelan users that they have a month to withdraw their funds and will no longer be facilitating the creation of new accounts by prospects residing in the country.
According to Paxful, its exit from this market despite a promising future was majorly influenced by regulatory risks since Venezuela is among the countries sanctioned by the U.S. An exit statement by the firm highlighted that,
“Due to concerns regarding the regulatory landscape around Venezuela and Paxful's risk tolerance, we regret to report that Paxful will be ceasing operations in Venezuela.”
Notably, Paxful had been trying to salvage its operations in the South American country for the past few months. The P2P Bitcoin exchange began with banning the use of state-backed bank accounts from Banco de Venezuela. It further enhanced these efforts by refusing transactions pegged on the Petrodollar (state-backed crypto) as well.
Well, it seems that the platform’s efforts eventually did not match its risk tolerance to keep the Venezuelan shop open. Paxful was, however, keen to clarify that its exit from the Venezuelan market was not from local regulatory pressure, but the U.S Office of Foreign Asset Control (OFAC). This financial intelligence and enforcement agency of the U.S Treasury Department has sanctioned some countries, including Venezuela.
Therefore, the business landscape in Venezuela when it comes to International payment networks has taken a hard hit in recent years. Consequently, service providers like Paxful have found it difficult to continue their operations as a going concern despite the country’s increasing BTC adoption. Diplomatic uncertainty is now taking center stage in the risks attributed to launching crypto services in Venezuela; its government recently blocked locals from accessing Mercadolar and Coinbase crypto exchange.
Other platforms like LocalBitcoins, however, continue to operate in this uncertain jurisdiction. This P2P crypto exchange is, in fact, the market leader with an average volume of $4.5 million traded last week. It clearly enjoys an upper hand in risk tolerance over Paxful, whose volumes were roughly $25,000.