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As we all know, Revolut has decided to become one of the Big Boys of Banking.
Earlier this year, the London-based fintech, which is gearing up for a fundraiser that would value it between $ 10 billion and $ 15 billion, applied for a full UK banking license. She has also hired big names in banking and mainstream finance such as founder of the company now known as Abrdn, Martin Gilbert and former Goldman Sachs vice president Michael Sherwood.
But somewhat paradoxically, Revolut is also set to become one of Bitcoin’s Big Boys.
It’s not hard to see why – the business has never been profitable on an annual basis, even though it has occasionally done so on a monthly basis. And the only months that this was the case tended to be times of crypto mania. It was briefly profitable during the bitcoin boom of late 2017, and Revolut recently said it has been profitable every month since November, when bitcoin has grown by over 300%. With the company charging 1.5% per trade and opening 300,000 new crypto wallets per month in December and January – well, you do the math, as they say.
But Revolut is considering changing its Bitcoin strategy. Until now, there has been what fintech called a “walled garden†system, in which you didn’t actually have control over your own bitcoin; instead, you had a claim on a certain amount and could only withdraw it by delivering it in fiat money. Starting next Thursday, however, customers using their ‘Revolut Metal’ premium account will be allowed to withdraw bitcoins to another bitcoin wallet. This means that it will be a real Bitcoin transaction, recorded on the real Bitcoin blockchain, which has not been the case until now. It will start on a small scale, in ‘beta mode’, with withdrawals limited to £ 500 per day or £ 1,000 per month.
Revolut wasn’t supposed to announce it until next Thursday, but it accidentally did so via a now-deleted blog post on Thursday morning, reported by AltFi, which the company told us was “due to a planning error “. But Revolut announced it to employees on Wednesday night, in a company-wide communication. And we feel like Revolut is pretty excited about everything.
Employees were told (Revolut emojis but we underline ours):
Huge Revolut milestone to be announced. Our public beta for crypto withdrawals has now been launched smoothly for all eligible users (UK metal customers). 🚀
And. . . our first user who is not a Rev employee has now successfully withdrawn Bitcoin to their own wallet and this transaction is recorded on the blockchain (wen NFT? 💰)
There is a bit of fun at the end after various teams have been let go:
Exciting moments 🚀🚀🚀
And also . . . thanks to you Bitcoin, for making all our dreams come true – only at the top 📈
* no investment advice – Bitcoin is a high risk asset not covered by FCSC protection and extremely volatile. Investments can go down as well as up.
Thank goodness they added that disclaimer at the end, eh? We’re starting to think that it could be some sort of irresponsible kind of crypto-bro, who seemed only interested in making big bucks easily from the huge fees they charge retail investors, and didn’t really seem to be the type of people you ‘I want to take care of your hard earned money. Too bad, however, that they were mistaken in the name of Financial Services Compensation Scheme (FSCS).
But it’s an interesting development. Revolut is regulated by the FCA as an electronic money institution, but does not have a crypto license because. . . no such thing exists in this country. The walled garden system meant that in theory Revolut wouldn’t lose track of where the money was going – you couldn’t just send your money to a Bitcoin wallet in Iran or North Korea, for example.
We asked Revolut how they would prevent crypto withdrawals from becoming an avenue for money launderers and they stated that “all external crypto addresses that a user adds to their account and all user withdrawals will be filtered by Revolut’s blockchain analysis partner â€, and that“ Revolut’s blockchain Analysis tool analyzes each address and provides a risk score based on the address’s link to illegal activity (prior hacking, black market activity, etc.) as well as links to the sanctions list and sources of terrorist financing.
All right, but what if this is a new address that has not been linked to such activity?
They added:
In addition to blockchain analysis, Revolut has adapted its own anti-money laundering rules to apply to its cryptocurrency product, which are triggered when a user’s behavior on the Revolut app. suggests an increased risk of money laundering. If these addresses or withdrawals violate any of Revolut’s anti-money laundering rules, Revolut will follow its financial crime procedures, depending on the seriousness of the violation. (As in other financial crime cases, we do not disclose the nature of the proceedings for obvious reasons.) Unlike many other crypto companies, Revolut has the advantage of applying financial crime controls to a regulated company and has taken that experience in designing the systems and controls surrounding the cryptocurrency withdrawal product.
All we would say is that luckily Revolut hasn’t had too many issues with its anti-money laundering procedures in the real money world.
“2021 is the year of crypto at Revolut!”
Revolut is fighting more generally on crypto – it sent an email to customers earlier this month in which it announced that 11 new crypto tokens are now tradable:
To open hot parts like Uniswap, Cardano and more
We went from 10 to 21 chips with this new drop. More familiar [sic] tokens like Bitcoin, you will now be able to trade Cardano, Uniswap, Synthetix, Yearn Finance, Uma, Bancor, Filecoin, Numeraire, Loopring, Orchid and The Graph
(We keep telling you that the thing that gives value to all these cryptocurrencies – last count 9,486 of them – is scarcity.)
The company also told customers:
2021 is the year of crypto at Revolut! A whole year to bring you new features, new tokens, and more surprises along the way.
If you haven’t explored crypto in the app yet, this is a great opportunity to discover something new.
With “hot pieces†like “The Graph†now available, the opportunity is truly ours. Thank you * you *, Revolut, for making all of our dreams come true. We know you are not a bank in UK yet, but we think our money may in fact be protected by your FCSC (For Crypto Spawns Crypto!) System after all. We are convinced that with you our money will only increase 📈.
Related links:
Revolut: hype bitcoin merchant or bank? – FT Alphaville
The virus crushed the dream of the challenger bank – FT Alphaville
Revolut’s growing pains rumble – FT Alphaville
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