Changes to Telegram Wallet: KYC and New Provider

Telegram’s Wallet, a third-party cryptocurrency wallet mini app, is introducing sweeping changes that will tighten its Know Your Customer (KYC) regulations and alter its service provider, affecting how users interact with its platform.

Enhanced KYC Requirements

As of May 29, the Wallet has mandated the disclosure of additional personal information for users to access its core functionalities, except for withdrawals. From June 3, users will need to provide their name, phone number, and date of birth to utilize most features offered by the Wallet, marking a significant departure from the previously lax requirements.

This new KYC system marks a substantial shift in the user experience on Telegram’s Wallet. Previously, users were not required to complete any KYC procedures to utilize the wallet’s basic features. The updated system introduces three distinct tiers of identification, each with varying transaction limits and requirements.

The first tier, labeled 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 necessitate any documentation. However, the limits are approximate and can vary depending on local exchange rates, as stated in Wallet’s KYC notice.

The second tier, known as the “extended” version, requires users to submit their national identification. This tier allows for transactions up to 100,000 euros ($108,000) daily and 1 million euros ($1.08 million) monthly. For users seeking even higher transaction limits, the “advanced” version is available, which requires the provision of a residential address and removes any upper limit on the sum of funds that can be transferred. 

These new regulations also impose significant limits on card purchases and peer-to-peer transactions. However, the changes do not apply to TON Space, Wallet’s self-custody sub-wallet, which enables users to conduct decentralized swaps and transfer non-fungible tokens (NFTs).

Change in Provider

In conjunction with the KYC updates, Telegram’s Wallet announced a change in its service provider. Effective 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 the merger of Wallet with TOP in September 2023 to collaboratively work on Web3 applications and 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 Wallet might possess about its users. A spokesperson for Wallet assured that this data would be stored securely and would not be used for any purpose other than the operation of Wallet.

Users who wished to prevent their data from being transferred to WOT Global had the option to delete their Wallet accounts by May 20. Wallet emphasized that this change is part of ongoing efforts to enhance service quality.

Since telegram’s Wallet is a mini-app on the Telegram platform, it enables users to purchase cryptocurrencies like Bitcoin, Tether, and Toncoin (TON), a cryptocurrency initially backed by Telegram. The wallet operates as a custodial service, meaning that users do not directly own their assets but instead trust a third party to hold their crypto. This custodial nature allows Wallet to impose limits on crypto transactions, contrasting with 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 view the stricter KYC measures as a necessary step towards broader adoption and enhanced security.

Wallet’s Chief Operating Officer Halil Mirakhmed explained in November 2023 that the decision to maintain Wallet as a custodial solution was aimed at simplifying the onboarding process for new users. This approach aligns with the broader industry trend towards enhancing security and compliance, even as it brings up debates about the balance between user convenience, privacy, and regulatory adherence. 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.