Regulation, education and cash buy frustration

Jimmy Chambrade and Aurore Galves Orjol, co-founders of Bitcoin-lyon, first heard about Bitcoin (BTC) in 2014. Around that time, their close friend and now business partner, Emmanuel, mined Bitcoin using application-specific integrated circuits. However, it took three years and a face-melting bull run before the pair could set aside the time to engage with the technology.

Fast forward to 2017, and Chambrade and Galves Orjol had just returned from an around-the-world trip. Although ready to return to the world of work, they would rather avoid the traditional “nine-to-five” fiat lifestyle, or the “métro, boulot, dodo” (subway, work, sleep) routine as it’s known in France.

They began investigating Bitcoin and the cryptocurrency space, attending crypto meetups and testing out the tech. Their research and curiosity led to the creation of Crypto Lyon. As their first foray into the world of crypto, Crypto Lyon is a catch-all community for crypto enthusiasts in France’s third-most populous city.

They’re not “Lyon” about Bitcoin

On a deeper level, though, something about Bitcoin twigged during their encounters with fellow crypto enthusiasts — the pair was hooked. It could have been the philosophy behind Bitcoin, but the privacy, self-sovereignty and pseudonymous elements were also compelling, particularly for Chambrade. Either way, it soon became clear that working in Bitcoin was a fait accompli.

Galves Orjol noted that before committing to Bitcoin:

“It’s important to get to grips with the entire crypto ecosystem. We examined the world of crypto through the eyes of individuals and later an association. We developed and deployed smart contracts, hosted events for traders, and mixed with developers and analysts. Ultimately, though, the path led to Bitcoin.” 

They met and engaged with a host of crypto-curious and crypto-obsessed individuals in France before opening the bureau for Bitcoin-lyon in 2019. 

Initially, Bitcoin-lyon was a space for customers in Lyon to buy over-the-counter Bitcoin. However, “being profitable purely through the sale of Bitcoin on margin was tricky. Competing with the likes of Coinbase, Kraken and Binance was not enough,” Galves Orjol explained. The business soon developed a budding consulting operation, particularly useful for francophones new to Bitcoin.

Galves Orjol details that a lot of their dealings with the consultancy space revolve around the “blockchain not Bitcoin” confusion, a term and trend first coined by OG Bitcoiner Parker Lewis. In essence, entrepreneurs are often drawn to “blockchain,” the technology that’s now ironically world-renowned thanks to Bitcoin. But because Bitcoin receives bad press, entrepreneurs are put off building on Bitcoin and are thus pulled away from the real revolution.

“The lion’s share of our working day is speaking to clients about blockchain technologies, and more often than not, they realize that the killer app is the Bitcoin blockchain. Often, their big project doesn’t need a blockchain, it needs Bitcoin!”

The Crypto Lyon association lives on as Bitcoin-lyon grows into a one-stop shop for all things Bitcoin. Whether Lyonnais wish to buy, sell, learn about or integrate Bitcoin payments into their businesses, the team working at Bitcoin-lyon is on hand to provide Bitcoin educational and consultative tools. 

Bitcoin-lyon also takes advantage of a considerable unique selling point: It is the only Bitcoin vendor in France that accepts cash for crypto.

Regulation, regulation, regulation

An exceptional case among the Bitcoin vendors in France, customers of Bitcoin-lyon can swap their euro bills for Bitcoin. Galves Orjol and Chambrade were granted the license “by jumping through each and every hoop established by the AMF [L’autorité des marchés financiers],” France’s Anti-Money Laundering (AML) organization.

Indeed, French regulatory laws concerning Bitcoin are harsher than Zinedine Zidane when he’s all riled up. Know Your Customer (KYC) is required from amounts of just 1 euro. In practice, it means that an 18-year-old with 50 euros in their pocket thanks to a generous birthday gift must disclose their name, address and contact details to buy a petite amount of Bitcoin.

A mere 100 miles away, in neighboring Switzerland, customers can buy 900 euros of Bitcoin a day — no questions asked. Chambrade laments France’s overbearing rules for crypto, “Regulations are killing us. In 10 years’ time, there will not be a Bitcoin vendor left in the country.”

To make matters worse, compliance and AML requirements dictate that transactions must be traced. The combination of traceability and regulation stymies the ease of doing Bitcoin business:

“Compliance is expensive for Bitcoiner companies in France, whereas nearby in Switzerland, the rules are far more relaxed. Sometimes, we are not able to accept customers’ money here in France because we are very careful with AML and KYC laws. Yet we know that when we finish speaking with what could have been our customer, they can drive for one hour to buy Bitcoin without the same restrictions in Geneva.”

The situation is exacerbated by the French government’s treatment of Bitcoin businesses. Whereas “blockchain-focused” projects receive wild investments and incentives, Bitcoin-related projects in France are hamstrung by regulation. The country’s widely lauded “La French Tech” startup scene has still not accredited a Bitcoin startup despite the relative success of companies such as StackinSat. 

The well-known French crypto unicorn Ledger is an exception, but it started out as a hardware company in Paris. Chambrade explained:

“Ledger hit a critical mass for revenue and customers in hardware before it turned to software and retail avenues. Plus, hardware and R&D is a well-funded area of industry in France.”

Speculation vs. accumulation

As Bitcoin-lyon is the only physical retail outlet for Bitcoin in France, its clientele reflects the growing trends and demographics of Bitcoin buyers in the region. Broadly speaking, there are two clearcut groups of buyers: those in it for the technology (accumulators) and those in it to get rich (speculators).

There are those “who want to buy it now and sell it once it does a 4x,” Chambrade explained, and there are “those that have a real need for Bitcoin.”

Worth noting is that while French crypto regulations are strict, French tax laws are tighter still. A whopping 30% tax is imposed on all crypto sales for any profit over 300 euros. It pales in comparison to the United Kingdom’s 14,000-euro tax-free limit. Over in Switzerland, it’s a different ballpark: There is zero tax on personal crypto gains.

Notwithstanding, the rise of nonfungible tokens (NFTs) has enticed a growing number of speculators into the space. The “get-rich-quick” crowd often calls for appointments at Bitcoin-lyon to shill their next big NFT, assuming that Bitcoin is somehow required in their plan.

Similarly, the flavor-of-the-month altcoin, “whether it’s Solana (SOL), Cardano (ADA) or Dogecoin (DOGE) that’s mooning; it often leads to phone calls from potential clients who just want to buy the next big thing.”

Often, investors are simply impatient to part with their money. Galves Orjol sighed, “People don’t even understand what they are trying to buy.”

Chambrade is frank with these kinds of requests. First, he sets up a consultation to explain Bitcoin. He patiently illustrates the properties and history of Bitcoin, underlining the risks associated with any kind of crypto investment.

Following the consultation, if the customers are still keen to buy NFTs or altcoins, Chambrade helps them to set up a wallet to receive Bitcoin and shows them how to swap for Ether (ETH), Solana or otherwise.

Bitcoiners in Lyon

Galves Orjol noted that the prosaic “crypto bro” demographic has been improving over the years. Currently, their customers are about 70% male, 30% female. The stand-out age group is 35- to 55-year-olds. They tend to have some disposable income and a desire to understand the technology and represent one basket among the “accumulators.”

Common convincing arguments to orange pill this demographic are the rising prices in France (inflation sits at around 5%–6%) as well as wealth diversification strategies. Plus, these people have worked and lived through the 2007–2008 financial crisis in which banks’ predatory lending and malpractice crippled the global economy. In this context, Bitcoin is the life raft.

At the graying end of the demographic spectrum, there are internet-phobic, savvy pensioner customers. This group is keen to protect its wealth in “digital gold.” While the older generations may struggle to set up a Bitcoin wallet, “they understand money on a deeper level than younger people,” said Chambrade.

For example, the over-60s have lived through two periods in history where the French franc (the former national currency) lost purchasing power, so they understand what a devaluing currency means for wealth preservation.

The current macroeconomic background is enough to convince them that a currency with a fixed supply is a good hedge. Plus, they’ve seen money die, such as when the euro took over as the national and, indeed, Europe-wide currency in 1999.

Remittance is a beret good idea

Finally, there is the remittance camp of Bitcoiner customers: immigrants, expats or francophone diasporas who want to send money abroad cheaply and simply.

At the foot of the Alps, Lyon is an economic engine and metropole with high employment rates. It’s an increasingly attractive destination for jobseekers traveling from the Maghreb (Algeria, Libya, Mauritania, Morocco and Tunisia), as well as France’s former colonies, from Haiti to Djibouti.

Chambrade illustrates the situation, telling the story of the Algerian truck driver who transports and sells construction materials in Algiers. The trucker keeps Bitcoin “in his pocket” as opposed to bags of cash because it’s safer. If he were to transact with cash, he’d have to keep thousands of Algerian dinars on his person, which just isn’t worth the risk.

He said, “Although Bitcoin is still illegal in certain Maghreb countries, as long as you’re not winding up the authorities and, provided the sums aren’t astronomical, you can use Bitcoin without a hitch.”

Moreover, Bitcoin is an outlet that sidesteps the “monopoly money” risk. Sadly present in many African countries, but most well-known to Venezuela, currencies become monopoly money when hyperinflation takes over. Traders are forced to use stacks and stacks of cash to do business as the money devalues faster than ink can dry on the freshly printed notes.

Finally, for those without banking services, Bitcoin enables a certain level of financial freedom. And with the rise of the lightning network on Bitcoin, transactions from a fraction of a penny and up can be sent instantly and globally at a negligible cost. Customers can come in, set up a wallet, and easily send Satoshis to family members based in Africa or in developing countries around the world.

At home in Lyon, the footprint for merchants accepting Bitcoin and Bitcoin Lightning payments services is swelling. Bitcoin-lyon’s payment solution for merchants and e-commerce retailers has opened up the Bitcoin economy in the city.

Currently, there’s a barber, a few bars, a Lyonnais-style restaurant known locally as a “bouchon,” a T-shirt seller and an IT store. While the bull market ebbs and flows, the rendezvous list for new businesses is expanding every week.