Company Name: Follow up
Founders: Julian Linniger and Adam Pelican
Date of establishment: July 2020
Headquarter Location: Zurich, Switzerland
Amount of Bitcoin in the vault: One third of the relay treasury
Number of employees: 30
Website: https://relai.app/
Public or private? private
Julian Linniger is looking to give more Europeans exposure to bitcoin — even though regulators are making it harder for bitcoin companies like the one he co-founded, Follow upTo work on the continent.
Liniger, a dapper Swiss businessman, was one of the Forbes 30 Under 30 in 2022He believes there is a lot of work to be done to bring Bitcoin to Europeans, even if new regulatory regimes such as Markets in Crypto Asset Regulation (MiCA) Create more bureaucracy around serving EU and UK citizens.
“We are working to make Bitcoin more accessible, easier to use, and easier to buy for everyday 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 haven’t tried it yet because they haven’t been educated yet. In Europe, about 8% to 10% of people own bitcoin and 90% still don’t,” he added.
To reach that 90%, Liniger and his team at Relay 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 Relay compliant is a painstaking process, but Liniger, who is liberal-minded but pragmatic, sees it as a necessary evil.
“I’m trying to build the best company and get as many people involved in Bitcoin as possible in the way that’s most appropriate for Bitcoin, which is certainly self-custodial and using only Bitcoin, but we also need to stay within the realm of what’s legal,” Liniger explained.
“So we abide by these rules, whether I like it as an individual or not. 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 way to the relay
Liniger was first introduced to Bitcoin and cryptocurrencies in 2015 and quickly descended into the wider crypto rabbit hole.
In his early 20s, he watched Bitcoin’s price rise from $1,000 to $20,000 and witnessed Ethereum’s ICO boom up close when he spent part of 2017 in San Francisco, then a hotbed of cryptocurrency developer activity, in an exchange class while earning his MBA.
Upon returning to his native 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 to envision some products, like actually starting to offer custody services, trading in bitcoin, etc., which was unimaginable at the time,” Liniger said. “Now, many Swiss banks are doing that.”
By 2019, Liniger’s entrepreneurial drive had taken things to a new level. He wanted to build something bigger than just a consulting firm. This drive coincided with his personal embrace of investing in bitcoin rather than cryptocurrencies and his realization that there was no app in the Swiss or broader European market that allowed users to buy, hold and use bitcoin (which Relay does).
That same year, Liniger and his Relai co-founder, Adam Pellicon, entered a software competition and made it to the finals with their idea for the company. By 2020, the two had built a prototype and raised money from angel investors. By the summer of that year, the Relai app was launched with the goal of providing access to Bitcoin first and then other crypto assets.
But the Bitcoin community didn’t like the latter idea.
Bitcoin only
Liniger recalls introducing Relai’s “easy investing in crypto” promotion and the immediate backlash it sparked from Bitcoin users.
“They said, ‘Why crypto? Just stick with Bitcoin and make it really great,’” Liniger said, adding that Relay users urged him and his partner to make the app as user-friendly as possible and integrate then-new Bitcoin technology like Lightning, both of which Relay did.
Liniger, who first envisioned Relai as a Bitcoin-first crypto app, decided to make it a Bitcoin-only app.
“I thought it wouldn’t hurt to have a couple more (cryptocurrencies) as well,” Liniger recalls.
“But then I realized that this could actually be painful. All other cryptocurrencies don’t make sense in the long run if you want to be a savings app. Bitcoin is a savings technology; it’s digital gold,” he added, noting that other crypto assets don’t claim to be a store of value or act as a store of value.
Liniger also noted that by 2020, Bitcoin-only venture capital firms and more Bitcoin-only firms were starting to emerge, and he felt Relay could be part of that trend.
“We had River in the US, Bull Bitcoin in Canada, etc., and we were thinking we could be the category leader in Europe,” Liniger said.
Developing the European user base
Being based in Switzerland, Liniger and the Relay team had an advantage over the rest of Europe, as regulations in Switzerland are somewhat more flexible than those in the EU. However, Liniger did not want to serve only Swiss citizens for two reasons.
The first reason is that the percentage of Swiss citizens who own bitcoin is close to 20%, according to Linger, compared to about 10% of Europeans from other countries. There is a smaller market for those who are not familiar with bitcoin in Switzerland than there is for those living in the European Union and the United Kingdom.
The second reason is that Switzerland has a population of about 8.7 million, while the total population of the European Union plus the United Kingdom 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 hurdles.
“We are currently not allowed to actively recruit users in the EU for regulatory reasons,” Liniger explained. “We can use active marketing tactics 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.
Relai’s user base in these countries is likely to continue to grow rapidly as the company works to obtain a license from France that would allow it to advertise to EU customers.
“We will probably get the French license approval by the end of this year. Then at the beginning of next year, there will be a MiCA license, and this (French license) will turn into a MiCA license, which will then allow us to actively acquire customers across the EU,” Liniger said.
Once that happens, Liniger believes over 90% of bitcoin purchases in the EU and UK will be made via Relai.
Cost of compliance
As Linger, who is calm and collected, talks about the process of overcoming regulatory hurdles, one can only imagine how frustrating the process must have been for him and his team.
He explained that regulatory bodies and requirements have become significantly more intrusive not only for startups like Relay, but also for established financial institutions.
“I’ve heard stories from our CFO who was at ING, a huge bank, four or five years ago,” Liniger shared. “He was working in a risk management compliance department, which when he joined had three or four people, and the team has grown tenfold in the four or five years since.”
Linger went on to explain that many of Relay’s peers have up to a third of their team focused on regulatory compliance.
While he hopes that companies like Coinbase and Kraken fighting the SEC in court will set some sort of precedent that will make regulators back down, he doesn’t see the trend of regulatory overreach reversing yet, which seems a bit worrying to him.
“We don’t have those resources at all,” Liniger said, comparing Relay’s money 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 it to verify the identity of all its customers.
Customer ID is required, but don’t despair.
Relay recently It was announced 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 provide services without requiring users to do so.
“We’ve been forced to do this primarily by EU regulators, and increasingly by Swiss regulators as well,” Liniger said of the need to require customers to complete the KYC process. “The EU is putting pressure on Switzerland.”
Although Liniger wasn’t particularly happy about this, he wasn’t feeling 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 any currency.
“More than 50% of people will want access to Bitcoin simply because it’s a savings technology,” Liniger explained, meaning he still has about 200 million customers (170 times Relay’s current user base) to reach in the broader region Relay serves.
He certainly knows that some of these potential customers will choose to buy bitcoin or bitcoin ETFs held on their behalf by major financial institutions rather than use Relai, although he believes that younger people, who are more distrustful of established financial institutions, will choose to use Relai.
“The more progressive young people will want to take custody of themselves,” Liniger explained. “They will use something like Relay where they can buy directly into the custody of themselves and create a savings plan, and use it as a sovereign means of saving their money and purchasing power for the future.”