The Bottle Pay app once allowed users to send tiny amounts of bitcoin using just social media texts and handles, from Twitter to Telegram. There are roughly 974 members in the project’s Telegram group.
The London-based company raised $2 million in September, The Block reported at the time. Back in December, the team declined to name any of the investors but said the startup already served 10,000 user accounts.
Bottle Pay finally released a public beta with real bitcoin in late November, and just now realized new European regulations would dramatically alter the company’s roadmap.
“The amount and type of extra personal information we would be required to collect from our users would alter the current user experience so radically, and so negatively, that we are not willing to force this onto our community,” the company said in a statement, adding the team never charged for this service, added routing fees or sold anything to users.
First of many?
Bottle Pay won’t be the only British crypto startup impacted by the regulations, which require a strict user verification process. Similarly, the exchange Bitpanda announced on Friday it will roll out a new user registration process. Jon Matonis, chief economist at Canada’s Cypherpunk Holdings Inc., tweeted this policy applies to custodial crypto wallets.
The privacy-focused wallet Samourai Wallet, which isn’t publicly registered in any specific jurisdiction, tweeted earlier this year the team believes this policy also applies to noncustodial wallets (though they said they would not comply with it).
Teana Baker-Taylor, a London-based compliance expert and director of crypto industry group Global Digital Finance, said this policy could force all crypto wallet providers in the European Union to collect know-your-customer information from users.
In reference to cryptocurrency exchanges and custodial wallets, she said they will become “obliged entities,” similar to banks and other brokerage service providers.
“AMLD5 prohibits facilitated (non peer-to-peer) anonymous transactions,” Baker-Taylor told CoinDesk. “Custodian wallet providers and exchanges will be obligated to implement customer due diligence (including KYC) and transaction monitoring. They will also be required to maintain comprehensive records and report suspicious transactions.”
Speaking broadly in June to the need for more regulation in the global cryptocurrency industry, Steven Maijoor of the European Securities and Markets Authority (ESMA) said it’s “important to have risk warnings [and] risk information for consumers going into those products” – including anti-money-laundering procedures and arrangements.
When asked how specifically that policy should apply Maijoor said deferred to the expertise of the European Banking Authority.
In the meantime, Bottle Pay tweeted that all users should withdraw their funds within the next two weeks.
Nikhilesh De contributed reporting.