Company Name: Relay
Founders: Julian Liniger and Adam Bilican
Date of foundation: July 2020
Headquarters location: Zurich, Switzerland
Amount of bitcoin held in treasury: A third of Relai's treasure
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 regulators making it harder for bitcoin companies like the one he co-founded. Relayto operate on the continent.
Liniger, a Swiss businessman of impeccable appearance who was one of 'Forbes' 30 under 30 in 2022believes there is a lot of work to be done to bring bitcoin closer to Europeans, even if new regulatory regimes are introduced such as crypto-assets-regulation-mica”>Regulation of Cryptoasset Markets (MiCA) create more bureaucracy to serve EU and UK citizens.
“We are working to make bitcoin more accessible, easier to use and easier to buy for regular people,” Liniger told bitcoin Magazine.
“We are mainly targeting newcomers – the 90% of people who don’t have easy access to bitcoin yet or who simply haven’t tried it yet because they are not educated yet either. In Europe, around 8% to 10% of people have bitcoin and 90% don’t have it yet,” he added.
To reach this 90%, 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 in order 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 get as many people into bitcoin as possible in the most bitcoin-friendly way possible, which is certainly self-custody and bitcoin-only, but we also have to stay within the realm of what’s legal,” Liniger explained.
“So we adhere to these rules, whether I like it or not as an individual. As a businessman, I have to make these decisions,” he added.
Wise words from someone who is no stranger to taking the hard road.
The path to rela
Liniger was first introduced to bitcoin and cryptocurrencies in 2015 and quickly became immersed in the world of cryptocurrencies.
In his early 20s, he watched the price of bitcoin skyrocket from $1,000 to $20,000 and experienced the ethereum ICO boom up close while spending part of 2017 in San Francisco, then a hotbed of cryptocurrency developer activity, on an exchange semester while pursuing his MBA.
Returning home to Switzerland in 2018, he turned down a well-paid consulting job in the traditional finance world and instead founded Bravisa cryptocurrency consulting firm. During this time, he helped banks prepare to offer bitcoin services.
“We helped them position themselves strategically in this new world and also conceptualize some products, such as starting to offer custody services and trading of bitcoins, etc., which was inconceivable back then,” Liniger said. “Now, many Swiss banks are doing it.”
By 2019, Liniger’s entrepreneurial drive had gained new momentum. He wanted to create something bigger than a consulting firm. This drive coincided with his personal adoption of an investment thesis in bitcoin, not cryptocurrencies, and the realization that no app in the Swiss or broader European market allowed users to buy, hold non-custodially, and use bitcoin (all of which 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. In 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 this last idea.
bitcoin Only
Liniger recalled the introduction of Relai's promotional phrase “easy cryptocurrency investment” and the instant reaction it generated among Bitcoiners.
“They said, ‘Why crypto? Just stick with bitcoin and make it really cool,’” Liniger said, adding that Relai users urged him and his partner to simply make the app as easy to use as possible and to incorporate bitcoin technology that was new at the time, like Lightning — two things Relai has done.
Liniger, who had initially conceptualized Relai as a bitcoin-based cryptocurrency app, made the decision to turn it into a bitcoin-only app.
“(I thought) it wouldn’t hurt to have a couple more (cryptocurrencies) as well,” Liniger recalled.
“But then I realized that it would actually be detrimental. All the other[cryptocurrencies]don’t make sense in the long run if you want them to be a savings app. bitcoin is a savings technology; it’s 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 in 2020, bitcoin-only venture capital firms and more bitcoin-only companies began to emerge, and he felt that Relai could be part of this trend.
“We had River in the United States, Bull bitcoin in Canada, etc., and we thought we could be leaders in this category in Europe,” Liniger said.
Developing a European user base
Liniger and the team at Switzerland-based Relai had an advantage over the rest of Europe, as regulations in Switzerland are a bit more lax than in the European Union. However, Liniger did not want to cater solely to Swiss citizens for two reasons.
First, the percentage of Swiss citizens who own bitcoins is approaching 20%, according to Liniger, compared to 10% of Europeans in other countries. In Switzerland, the market for newcomers to bitcoins is smaller than that for those living in the EU and the UK.
The second reason is that Switzerland's population 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 certain regulatory headwinds.
“For regulatory reasons, we are currently not allowed to actively acquire users in the EU,” Liniger explained. “We can actively market in Switzerland, but not in all EU countries.”
Even in the absence of marketing, Relai continues to grow its user base, especially in Germany, Italy and France.
The number of Relai users in these countries is likely to continue to grow rapidly as the company is in the process of obtaining a license from France that will allow it to advertise to EU customers.
“We will probably receive approval for the French license by the end of this year,” Liniger said. “Then, early next year, there will be a MiCA license and this (French license) will become a MiCA license, which will allow us to actively acquire customers across the EU.”
Once this happens, Liniger believes that more than 90% of bitcoin purchases in the EU and UK will be made through Relai.
The cost of compliance
As a remarkably calm and level-headed 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 said regulators 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 big bank, four or five years ago,” Liniger shared. “He was in one of these risk management compliance departments, which, when he joined, was like three or four people and the team has grown tenfold in the four or five years since then.”
Liniger went on to explain that many of Relai’s peers have up to a third of their team focused on compliance.
While he is hopeful that companies like Coinbase and Kraken fighting the U.S. Securities and Exchange Commission (SEC) in court will set some sort of precedent that will cause regulators to back off, he doesn’t think the trend of regulatory overreach will reverse just yet, which he finds a little worrying.
“We don't have those 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.
This is part of the reason why Relai did not fight back in court when regulators told them they had to KYC (Know Your Customer) all of their clients.
KYC is required, but don't despair
I recently relaid announced that all users would 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 were basically forced by EU regulators and increasingly by Swiss regulators as well,” Liniger said in relation to the obligation to force clients to complete the KYC process. “The EU is putting pressure on Switzerland.”
While 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 don't already own any.
“More than 50% of people will want some form of access to bitcoin simply because it’s a savings technology,” Liniger explained, meaning he still has around 200 million customers (170 times Relai’s current user base) to reach in the broader jurisdiction Relai serves.
It is true that he knows that some of these potential clients will choose to buy bitcoins or bitcoin ETFs that major financial institutions hold for them rather than using Relai, although he believes that younger people, who are more distrustful of established financial institutions, will choose to use Relai.
“More progressive young people will want to take over custody themselves,” Liniger explained. “They will use something like Relai, where they can buy self-custody outright and set up a savings plan, using it as a sovereign way to save their money and purchasing power for the future.”
