French crypto brokerage Bitit is shutting down after six years in operation.
The closure comes at a time when the crypto market is in a bull run and bitcoin is trading near all-time highs of above $62,000.
"We are going to close Bitit by the end of April," Bitit co-founder and CEO Nicolas Katan told The Block in an exclusive interview. The firm is disabling its buy and sell features on Thursday and is set to halt withdrawals on April 30.
Operational difficulties, regulatory issues, and loss of competitiveness are the key reasons behind the closure, Katan told The Block.
Last September, Bitit lost its credit card acquirer, which heavily impacted its business, said Katan. He declined to name the acquirer, but The Block has learned it was Transact Payments. A credit card acquirer helps merchants process credit or debit card payments.
Credit cards were the most popular payment option at Bitit, Katan told The Block. So when the acquirer stopped working with Bitit due to its internal policies around working with crypto firms, it took almost two months for Bitit to find another acquirer.
"During those two months, we lost a lot of money," said Katan.
Soon after, in December, the deadline to get registered as a virtual asset service provider (VASP) with France's financial regulator AMF approached.
Bitit had to be registered as a VASP by December 18, 2020 but didn't receive the green light. The AMF told Bitit that it could continue its activities but without accepting new clients.
"That killed us," said Katan. "Around 90% of our trading volumes had been coming from new clients."
Existing customers contributed "extremely low" volumes, said Katan, because they viewed Bitit "like a McDonald's. You go over there, you take what you want, and then you leave."
Bitit was a non-custodial platform, meaning after buying cryptocurrencies, customers had to transfer out to their personal wallets.
Katan said Bitit could have continued and registered as a VASP, but there were "great uncertainties" of regaining its market share amid an increasingly competitive environment.
"If we get a VASP registration, then we will need to wait at least six to eight months to recover trading volumes. But we are not sure of that because we have lost all of our competitiveness. It's really catastrophic," he said.
Not only local but global competitors also impacted Bitit, said Katan. It was a "fee war" with these platforms, he said.
Katan founded Bitit in 2015 with Ugo Mare and Simon Potier. They bootstrapped Bitit into a fiat-to-crypto onramp in crypto's initial years. "The only problem that we solved in the last six years was accessibility," Katan told The Block.
Bitit claims to have served around 500,000 customers from over 50 countries and processed over $230 million worth of transactions. "We did it all with €5000 [around $6,000] in initial capital and less than €215,000 [around $260,000] raised," said Katan.
As for what's next, Katan said he would take some time off and then return to the crypto space. As for Mare and Potier, they will pursue personal projects, said Katan.
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