Regulation
Telegram wallet changes: KYC and new provider
Telegram’s Wallet, a third-party cryptocurrency wallet mini-app, is introducing sweeping changes that will strengthen its Know Your Customer (KYC) regulations and change its service provider, affecting how users interact with its platform.
Enhanced KYC requirements
Since May 29, the wallet has made it mandatory to disclose additional personal information allowing users to access its basic functionality, except for withdrawals. Starting June 3, users will be required to provide their name, phone number, and date of birth to use most of the features offered by the wallet, marking a significant departure from previously lax requirements.
This new KYC system marks a substantial change in the user experience on the Telegram wallet. Previously, users were not required to complete KYC procedures to use the wallet’s basic functionality. The updated system introduces three distinct identification levels, each with different transaction limits and requirements.
The first tier, referred to as the “basic” identification level, imposes a daily limit of 3,500 euros ($3,780) and a monthly limit of 35,000 euros ($37,800) on incoming crypto transactions. This level does not require any documentation. However, limits are approximate and may vary depending on local exchange rates, as noted in Wallet’s KYC notice.
The second tier, known as the “extended” version, requires users to submit their national ID. This tier allows transactions of up to 100,000 euros ($108,000) per day and 1 million euros ($1.08 million) per month. For users looking for even higher transaction limits, the “advanced” version is available, which requires the provision of a residential address and removes any upper limits on the sum of funds that can be transferred.
These new regulations also place significant limits on card purchases and peer-to-peer transactions. However, the changes do not apply to TON Space, Wallet’s self-custodial sub-wallet, which allows users to conduct decentralized exchanges and transfer non-fungible tokens (NFTs).
Source: Telegram Wallet official website
Change of supplier
Alongside the KYC updates, Telegram’s Wallet announced a change in service providers. Beginning May 30, 2024, Wallet Services will be managed by WOT Global Solution, a subsidiary of The Open Platform (TOP), formerly known as First Stage Labs. This change follows Wallet’s merger with TOP in September 2023 to work collaboratively on applications and Web3 development.
As part of this transition, all user data will be transferred to WOT Global Solution. This includes information such as names, addresses, phone numbers, transaction data, and any other data that Wallet may have about its users. A Wallet spokesperson assured that this data will be stored securely and will not be used for any purpose other than the operation of Wallet.
Users who wanted to prevent their data from being transferred to WOT Global had the option to delete their Wallet accounts before May 20. Wallet emphasized that this change is part of ongoing efforts to improve the quality of service.
Since Telegram’s Wallet is a mini-app on the Telegram platform, it allows users to purchase cryptocurrencies like Bitcoin, Tether and Toncoin (TON), a cryptocurrency initially backed by Telegram. The wallet functions as a custodial service, meaning users do not directly own their assets but rather trust a third party to hold their crypto. This custodial nature allows Wallet to impose limits on crypto transactions, unlike self-custodial wallets like MetaMask, Trezor or Ledger, where users have direct control over their assets without any imposed limits or KYC requirements.
Community response and future outlook
The response within the Telegram Wallet community has been mixed regarding these changes. Some users have raised concerns about privacy and centralization, fearing that the new requirements could negatively impact the wallet’s native token, TON. Others see stricter KYC measures as a necessary step toward broader adoption and stronger security.
Wallet COO Halil Mirakhmed explained in November 2023 that the decision to maintain Wallet as a custody solution was intended to simplify the onboarding process for new users. This approach aligns with the broader industry trend toward improved security and compliance, although it sparks debate over the balance between user convenience, privacy, and regulatory compliance. As Wallet transitions to its new service provider and implements these KYC changes, it remains to be seen how these developments will affect its user base and overall adoption within the rapidly evolving cryptocurrency ecosystem.