Relai’s Bitcoin Mission: Bringing Europeans the Orange Coin Despite Red Tape

Company Name: relations

Founders: Julian Liniger and Adam Bilican

Date of establishment: July 2020

Headquarters location: Zurich, Switzerland

Amount of Bitcoin held in treasury: A third of Relai’s treasury

Number of employees: 30

Website: https://relai.app/

Public or Private? Private

Julian Liniger is on a mission to give more Europeans exposure to Bitcoin – despite regulatory bodies making it difficult for Bitcoin businesses like the company he co-founded, Relai, to operate on the continent.

Liniger, a clean-cut Swiss entrepreneur who was one of the Forbes’ 30 Under 30 in 2022 believes there is much work to be done to bring bitcoin to Europeans, even as new regulatory regimes such as the Markets in Crypto-Assets Regulation (MiCA) create more red tape in terms of serving EU citizens and the Great Britain.

“We’re working to make Bitcoin more accessible, easier to use and easier to buy for everyday people,” Liniger told Bitcoin Magazine.

“We’re mainly targeting newcomers – the 90% of people who don’t yet have easy access to bitcoin or who simply haven’t tried yet because they haven’t been educated yet. In Europe, about 8% to 10% of people have bitcoin and 90% still don’t,” he added.

To achieve this 90% percentage, Liniger and the Relai team had to obtain the appropriate licenses and follow certain regulatory procedures, such as requiring customers to complete Know Your Customer (KYC) procedures to use the app. Keeping Relai compliant is a tedious process, but the libertarian-minded but pragmatic Liniger sees it as a necessary evil.

“I’m trying to build the best company and integrate as many people as possible to Bitcoin in the most Bitcoiner way possible, which is definitely self-custodial and only Bitcoin, but we also have to stay in the realm of what is legal”, Liniger. explained.

“So we follow these regulations whether I like it or not as a person. As a businessman, I have to make these decisions,” he added.

Wise words from someone who is no stranger to walking the hard road.

The road to Relai

Liniger was first introduced to bitcoin and cryptocurrency in 2015 and quickly entered the broader cryptocurrency hole.

In his early 20s, he watched bitcoin skyrocket from $1,000 to $20,000 and experienced the Ethereum ICO boom up close, spending part of 2017 in San Francisco, then a hotbed for developer activity crypto, in an exchange semester while pursuing his master’s degree. degree in business administration (MBA).

Upon returning home to Switzerland in 2018, he turned down a well-paid consulting job in the world of traditional finance and instead founded Bravis, a crypto consulting firm. During this time, he helped banks prepare to offer Bitcoin services.

“(We) helped them strategically position themselves in this new world and also conceptualize some products, like actually starting to offer Bitcoin custody, trading, etc., which was unthinkable back then,” Liniger said. “Now many Swiss banks are doing it.”

By 2019, Liniger’s entrepreneurial drive had kicked into a new gear. He wanted to build something bigger than a consulting firm. This urge coincided with his personal adoption of a bitcoin-not-crypto investment thesis and the realization that no app in the Swiss or wider European market allowed users to buy, hold, and use bitcoin ( everything Relai does).

That same year, Liniger and his future co-founder at Relai, Adam Bilicon, participated in a hackathon and made it to the finals with their concept for the company. By 2020, the two had built a prototype and raised money from two angel investors. By the summer of that year, the Relai app went live with the intention of first providing access to bitcoin and then offering other crypto assets.

However, the Bitcoin community did not like the latter notion.

Bitcoin only

Liniger recalled introducing Relai’s pitch “easy crypto investment” and the instant reaction it drew from Bitcoiners.

“They were like, ‘Why crypto? Stick with Bitcoin and make it really great,” Liniger said, adding that Relai’s users urged him and his partner to make the app as user-friendly as possible and incorporate the then-new Bitcoin technology, like Lightning, both of which Relai did.

Liniger, who first conceptualized Relai as a Bitcoin-first crypto app, made the decision to make it a Bitcoin-only app.

“(I thought) it wouldn’t hurt to have a few more (cryptos),” Liniger recalled.

“But then I realized it was actually going to hurt. Everything else (cryptos) doesn’t make sense in the long run if you want to be a savings app. Bitcoin is a saving technology; it is digital gold,” he added, noting that other crypto assets do not claim to be or act as a store of value.

Liniger also noted that by 2020, both Bitcoin-only venture capital firms and more Bitcoin-only companies had begun to emerge, and he felt that Relai could be part of that trend.

“We had River in the US, Bull Bitcoin in Canada, etc. and we thought we could be the leader in this category in Europe,” said Liniger.

Development of a European user base

Based in Switzerland, Liniger and the Relai team had a head start on the rest of Europe, as Swiss regulations are slightly more relaxed than those in the European Union. Liniger, however, did not want to serve only Swiss citizens for two reasons.

The first is that the percentage of Swiss citizens who own bitcoin is closer to 20%, according to Liniger, compared to about 10% of Europeans in other countries. There is less of a market for those new to Bitcoin to pursue in Switzerland compared to those living in the EU and UK.

The second reason is that the population of Switzerland is about 8.7 million, while the total population of the EU plus the UK is over 500 million.

Over the past four years, Relai has acquired 120,000 users across the continent, and Liniger says the growth curve is accelerating even as the company faces some regulatory impediments.

“We are currently not allowed to actively acquire users in the EU for regulatory reasons,” explained Liniger. “We can do active marketing tactics in Switzerland, but not in all EU countries.”

Even without marketing, Relai continues to grow its user base, especially in Germany, Italy and France.

The number of Relai users in these countries will likely continue to grow rapidly as the company is in the process of obtaining licenses from France that will allow the company to advertise to customers in the EU.

“Probably by the end of this year, we will get the French license approved,” Liniger said. “Then, early next year, there will be MiCA and that (French license) will move to a MiCA license, which will then allow us to actively acquire customers across the EU.”

Once this happens, Liniger believes that over 90% of EU and UK bitcoin purchases will be made through Relai.

The cost of compliance

As the notably calm and composed Liniger talks about the process of overcoming regulatory hurdles, one can’t help but imagine how frustrating the process has been for him and his team.

He stated that regulatory bodies and requirements have become significantly more intrusive not only for startups like Relai, but also for established financial institutions.

“I heard stories from our CFO, who was working at ING, a huge bank, four or five years ago,” Liniger said. “He was in one of these risk management compliance departments, which when he joined was like three or four people, and the team has been 10 times in the four or five years since then.”

Liniger went on to explain that many of Relai’s colleagues have up to a third of their team focused on regulatory compliance.

While he hopes the likes of Coinbase and Kraken battling the US Securities and Exchange Commission (SEC) in court will set some sort of precedent that will prompt regulators to back off, he doesn’t see the trend toward expanded regulation it will reverse for now, which he finds slightly worrying.

“We don’t have these resources at all,” Liniger said, comparing Relai’s funds to the kind of money Coinbase and Kraken have in their coffers to fight regulators in court.

That’s part of the reason Relai didn’t fight back in court when regulators told them they had to KYC all their customers.

KYC is required but don’t despair

Relai recently announced that all users will have to provide their personal information by October 31, 2024 to continue using the app, after four years of being able to offer services without requiring users to do so.

“We’ve basically been forced by EU regulators and increasingly by Swiss regulators,” Liniger said of the need to get customers to complete the KYC process. “EU puts pressure on Switzerland”.

Although Liniger didn’t seem particularly happy about this, he didn’t seem defeated either. Instead, he seemed as focused as ever on his mission to bring bitcoin to the 90% of EU and UK citizens who still don’t have it.

“Over 50% of people will want some access to Bitcoin just because it’s a savings technology,” explained Liniger, which means it still has about 200 million customers (170 times its current user base Relai) to reach the broader jurisdiction that Relai serves. .

Of course, he knows that some of these potential customers will opt to buy bitcoin or bitcoin ETFs that large financial institutions hold for them instead of using Relai, although he believes that young people, who no longer trust established financial institutions , will opt to use Relai. .

“The more progressive young people will want to take custody themselves,” Liniger explained. “They’ll use something like Relai where they can buy directly into self-storage and set up a savings plan, using it as a sovereign way to save their money and purchasing power in the future.”