Relai Leverages 21 Analytics to Sell Bitcoin Compliantly

Aiming to become a one-stop shop for easy Bitcoin investment, Relai had plans that would change its compliance obligations. Launched in 2020, people with no crypto experience could easily buy and store Bitcoin. However, at the time, Relai leveraged its partnership with - the also Swiss - broker Bity to act as an intermediary, processing their customer's orders. To fulfil Relai's vision, the founders Julian Liniger and Adem Bilican decided to incorporate the brokerage functions into their business.

This decision brings challenges to Relai's operations, especially to the compliance team. Relai has always offered a self-hosted wallet (unhosted wallet) - where the user holds their private keys. But now, being registered as a virtual asset service provider (VASP) and allowing their customers to buy Bitcoin to their Relai wallet or any other self-hosted wallet, they needed to comply with FINMA's requirement:

"[...] transactions are only permitted from and to external wallets if these belong to one of the institution's own customers. Their ownership of the external wallet must be proven using suitable technical means." (source: FINMA Guidance 02/2019 Payments on the blockchain)

This means that VASPs sending funds to external wallets (also known as self-hosted, non-custodial, unhosted, or private wallets) must identify the owner of such a wallet, tying the address to an onboarded customer. This is an effort to better trace virtual assets and, thus, combat money laundering.

As a startup focusing on efficiency, Relai looked for automated ways that did not disrupt the customers' journey. Since Switzerland was one of the first countries to enforce such a rule, it was important that Relai complied without adding friction for their users so international competitors did not leverage a better user experience. 

Solution

To be compliant, Relai turned to 21 Analytics' solution. With 21's product, ownership proofs are fully automated and, therefore, as easy for the compliance team as they are for customers. 

How Does 21 Analytics' Solution Work for Relai?

Relai's goal is to be the easiest way to invest in Bitcoin. When a user requests to buy Bitcoin, the app requests proof of ownership of the depositing wallet by providing a message to be signed from the external Bitcoin address. Once the user signs the proof, Relai identifies that the user owns the wallet and, thus, allows the withdrawal to continue seamlessly. All this is done fully automatically and requires no changes to the app's user interface.

According to Adem Bilicen, Relai's CTO, 21 Analytics' solution was ready-to-use. With such an easy implementation process, it would have been way more costly to develop a product solution internally. Relai solved the ownership proof problem for all wallets at once and achieved compliance from day one.

Results

For Relai, the two main advantages of 21 Analytics' solution are excellent user experience and software integration. The great user experience allowed 100% of transactions to go through automatically, keeping users engaged without adding difficulties or breaks in their journeys. The software implementation was a breeze: summing up all integration efforts necessary, the CTO did not dedicate more than two (2!) hours. On top of it, an improvement requested by the team was launched in record time: the feature was ready over a weekend.

Adem's plans for Relai also count on 21 Analytics: "We want to empower the customer to do everything on mobile", so connecting hardware wallets to Android smartphones for easier proofs is key: and 21 Analytics' solution is what enables this amazing compliance experience.

Want your company to keep transacting with self-hosted wallets compliantly, too? Reach out to 21 Analytics.