From today, all ETH and ERC20 token wallets and trading on LocalCoinSwap will be handled in a completely non-custodial manner. These changes make LocalCoinSwap the first-ever P2P cryptocurrency exchange to transition from custodial to non-custodial. In addition, LocalCoinSwap is the world’s first exchange to allow users to buy and sell major Stablecoins in a completely non-custodial manner.
Users can now trade Ethereum, Stablecoins, and more, in a trustless manner.
You now control your own private keys, and LocalCoinSwap has no power to hold, freeze, or move your funds - even if we wanted to!
The following currencies are now non-custodial, with private keys stored in a client-side wallet or external wallet, ie: MetaMask:
- Ethereum (ETH)
- Tether (USDT)
- TrueUSD (TUSD)
- LocalCoinSwap Cryptoshares (LCS)
- USD Coin (USDC)
- Paxos (PAX)
- Nexo (NEXO)
- Dai & Sai (coming soon)
The following currencies are still secured by our cold-wallet setup, and will be migrated into non-custodial soon:
The following currencies are on our short-list for listing once we are 100% non-custodial:
What is a non-custodial exchange?
You are always in control of your funds, and by moving away from a custodial framework, this means that there is no centralized wallet aggregating users’ funds. Therefore, your crypto cannot be taken by the platform, seized by government agencies, or stolen by nefarious actors such as hackers. You don’t even have to trust us, as we have no power to do anything with your money!
The majority of cryptocurrency exchanges today are what is known as custodial exchanges. This means that when you deposit your cryptocurrency into the exchange, you are trusting them to hold your funds and keep them safe. These funds are stored in wallets where you do not have access to the private key and the exchange has complete control over your funds.
Although many custodial exchanges may be reputable, trusting an exchange with your valuable crypto assets carries risk. These range from hackers breaching the security of the platform and stealing your funds, to the platform exit scamming and simply taking your funds and keeping them - this is something that has occurred to users’ funds in various exchanges across the world.
In addition, developing worldwide regulations are imposing restrictions on cryptocurrency exchanges and forcing things such as overbearing KYC requirements that tend to systematically exclude those most in need of crypto. These regulations predominantly relate to how companies manage the custody of digital assets on behalf of users. Hence non-custodial platforms allow a greater amount of privacy and freedom to their users while still remaining fully compliant with regulatory standards.
Why did we change to non-custodial?
Platforms like Localbitcoins and Paxful have reacted to developing crypto-regulations by violating the privacy of their users, blocking accounts en-masse, and seizing users’ funds in an unethical manner. Rather than following suit, LocalCoinSwap has decided to buck this trend and develop a technological solution to ensure that people are still able to buy and sell cryptocurrency in the way it was originally intended while remaining compliant and serving users worldwide.
What comes next?
Non-custodial ETH and ERC20 trading is just the beginning for LocalCoinSwap. Coming up we have a bunch of exciting new features:
- More cryptocurrencies supported non-custodial
- End-to-end encrypted chats using the Whisper Systems protocol
- Official public release of all smart-contract code
- Whitepaper V2
Thank you for being part of our exciting journey!