Bitit is shutting down as its CEO cites operational difficulties, regulatory issues, and loss of competitiveness as the key reasons behind the closure.
April 15, 2021 | AtoZ Markets – French cryptocurrency broker Bitit is shutting down after operating for six years. The closure comes at a time when the crypto market is experiencing its bullish cycle and Bitcoin is trading at $63,000.
“We will close Bitit at the end of April,” said Nicolas Katan, Bitit’s co-founder and CEO, in an interview with The Block. The company is deactivating its buying and selling features on Thursday, April 15 and will deactivate withdrawals on April 30.
Operational difficulties, regulatory issues, and the loss of competitiveness are the main reasons behind the closure, according to Katan.
In September 2020, Bitit lost its credit card acquirer, which greatly impacted its business. Katan declined to name the buyer, but The Block found it was Transact Payments. The acquirer helps merchants to process payments by credit or debit card.
Credit cards were the most popular option at Bitit, according to Katan. When the acquirer stopped working with Bitit because of its internal policies on working with crypto companies, it took Bitit almost two months to find another acquirer.
“During these two months, we lost a lot of money,” he said.
Shortly thereafter, 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 approval. The AMF told Bitit that it could continue its activities but without accepting new clients.
“It killed us,” according to Katan. “About 90% of our volumes traded came from new customers.”
Existing customers contributed “extremely low” volumes, according to him, as they considered Bitit “like a McDonald’s. You go there, ask for what you want and then leave”.
Bitit was a non-custodial platform, that is, after buying cryptocurrencies, customers had to transfer them to their personal wallets.
Katan said that Bitit would have continued and registered as a VASP, but there was “a lot of insecurity” about getting its market share again amid an increasingly competitive environment.
“If we obtain a VASP record, then we would need to wait between six to eight months to recover trading volumes. But we are not sure about that, as we have lost all of our competitiveness. It really is a catastrophe,” he explained.
Local, as well as global competitors, also impacted Bitit, as it was a “fee war” against these platforms, he said.
Katan founded Bitit in 2015 with Ugo Mare and Simon Potier. They pushed Bitit on a platform for converting fiduciary to crypto (“on-ramp”) in the early years of crypto. “The only problem we solved in the past six years was accessibility,” he said.
Bitit claims to have served nearly 500,000 customers in more than 50 countries and processed more than $230 million in transactions. “We did everything with €5,000 [about $6,000] in seed capital and less than €250,000 [about $260,000] raised,” said Katan.
Regarding the future, Katan said he would take time off and then return to the crypto sector. Mare and Portier will develop personal projects.
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