This is not the surprise. Regulation pressure especialy in the KYC part as well as anti-money laundering and terorrism financing is geting stonger and they are actualy forcedto obey such regulations in order to keep their business and to run it legitimately. But this also represents certain level of protection for users, despite the lower level of anonimity.
Times has really changed and everyone's eyes is on crypto. I haven't imagine and never thought the Localbitcoins will also be targeted by regulators, unfortunately the worst scenario has happened and we can't do anything by to comply and be fully KYC compliant before you can do personal trades.
Well starting this 2018 crypto has been put into their radar specially when the price goes almost $20K and now governments are putting pressure on anything that involves crypto. I just don't like government saying that they are doing it to curb out scam, I'm sure that they want to tax us and have a piece of everything.