Revolut, the UK-based cryptocurrency bank, gives users legal ownership rights. How did they achieve this?

Revolut, a financial technology startup bank based in London, launched its Bitcoin buying, holding, and transferring services in July 2017, and subsequently added Ethereum (ETH) and Litecoin (LTC) later that year. In a recent announcement, Revolut stated that starting on July 27th, users will have legal "ownership" of the cryptocurrencies they hold, but there will be some restrictions on the "transfer" of these cryptocurrencies.

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Revolut, launched in 2015, is currently valued at over $5 billion. It provides faster and more convenient financial service access to over 10 million users in the UK. New users can open accounts in minutes. The company has also introduced a stock trading platform and an insurance brokerage to offer more diversified services.

Unlike traditional banks, Revolut allows users to open accounts only through a mobile app and provides physical as well as virtual debit cards on the app. The app also supports online payments, lower foreign exchange rates, and cross-border transfers.

Revolut continues to expand its banking and cryptocurrency business globally. In late March of this year, it entered the US market, but initially opened core features only to US residents, which are standard financial account services, claiming to offer cryptocurrency-related services in the future.

Restrictions on Cryptocurrency Transfers

Revolut listed Bitcoin, ETH, and LTC for trading, custody, and transfers in 2017, and started supporting Bitcoin Cash (BCH) and Ripple (XRP) in 2018.

In a recent announcement, the company stated that users will officially become "beneficial owners" of these five cryptocurrencies, effective July 27. However, the updated terms also mention that cryptocurrencies cannot be transferred to users outside the Revolut system. The announcement emphasizes:

You can transfer cryptocurrencies to other Revolut users within the Revolut app, but not to individuals outside of Revolut.

Revolut claims that users have "full control" over their cryptocurrencies, and Revolut will carry out transactions based on user instructions, but they cannot trade on their own. In addition, Revolut has also discontinued cryptocurrency card payments, which was one of the few ways users could use cryptocurrencies outside the Revolut system.

Revolut is a well-known European fintech unicorn. The change in cryptocurrency user terms may be a response to preparing for stricter US regulations. Most core functions available to European users are still not open in the US. Furthermore, traditional financial institutions like Fidelity already have a significant market share in the US. Revolut's expansion in the US market may face significant challenges.