When the crypto industry is running bullish with a record in Bitcoin prices, French digital asset brokerage, Bitit is shutting its operations due to regulatory difficulties and cut-throat competition.
According to a notice on Bitit’s website, the company will disable its crypto buying and selling functions from April 15 and will halt all withdrawals on April 30, marking an end of the services.
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Bitit was founded in 2015 and was offering instant cryptocurrency purchasing facilities using fiats. The platform was non-custodial, meaning users had to transfer the digital assets to their own wallets instantly, unlike major crypto players like Coinbase, Binance and others.
The Wrath of Regulation and Competition
Though many factors were responsible to push the startup towards closing, Bitit Co-Founder and CEO, Nicolas Katan told The Block that it was France’s regulations on crypto companies that made most of the dent.
The company could not receive the status of a virtual asset service provider (VASP) from the French regulator before the set deadline of December 18, 2020. Though the AMF allowed the company to operate, it did not permit the startup to onboard new clients.
Katan revealed that the platform receives 90 percent of its volumes from new clients, and such regulatory decisions had crippled its business.
“That killed us,” Katan told the crypto-focused publication.
But, the regulatory decision was the last blow on the already struggling crypto startup. Bitit, which used to handle most of the transactions using credit cards, lost its credit card acquirer last September. According to the CEO, that heavily impacted the business of Bitit.
Though the startup could have pursued to become a VSAP, it did not have enough resources to continue, and the uncertainty of the crypto industry with heavy competition made the situation worse.
“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,” Katan said.