Address Ownership Proof Protocol (AOPP) Explained
What is AOPP?
AOPP is an address protocol for signing messages that essentially acts as a proof-of-address for your Bitcoin wallet.
The implementation of AOPP enables users to conveniently buy bitcoin to an external, non-custodial wallet.
Does AOPP Reduce Your Privacy?
AOPP is a standardized protocol used between a virtual asset service provider (VASP) and a user. The VASP already has information about their user. In the case of Relai, that’s the user’s IBAN. Nothing changes there.
When a user buys bitcoin from a VASP, they need to specify an external Bitcoin wallet address. In the case of Relai, you can buy bitcoin and send it to an external wallet. Again, nothing changes here.
AOPP is merely a protocol that digitally signs messages using the key from the corresponding buy address, making bitcoin buys much easier for Bitcoin users without strong technical know-how.
No information about the user’s Bitcoin wallet leaks to any third parties.
Why Relai Uses AOPP
Relai is a Switzerland-based regulated virtual asset service provider (VASP), which means we are obliged to comply with Swiss crypto regulations.
We are legally compelled to require proof of ownership of a customer’s Bitcoin wallet address before purchases can be made to a non-custodial wallet.
According to VQF Regulations, Art. 14, Paragraph 1, “Payment transactions to and from external wallets are only permitted where the wallets are owned by a member’s own customer. The customer’s authority over the external wallet must be verified using suitable technical measures. Transactions between customers of the same member are permitted.”
Moreover, a FINMA Guidance from February 2019 on ‘Payments on the blockchain,’ states: “A transfer from or to an external wallet belonging to a third party is only possible if, as for a client relationship, the supervised institution has first verified the identity of the third party, established the identity of the beneficial owner and proven the third party’s ownership of the external wallet using suitable technical means.”
To comply with VQF and FINMA regulations, Relai uses AOPP as an automated solution for providing proof of ownership of an external non-custodial Bitcoin wallet address.
Moreover, the implementation of AOPP makes it easier to provide external stacking for Relai users as they will not be required to sign messages themselves.
If users were to use a third-party wallet to receive their purchased bitcoin and sign their messages themselves, they are essentially doing nothing else than the protocol already does in an automated manner.
Since we are building the world’s easiest Bitcoin investment app, our focus lies on simplicity and beginner-friendliness while staying true to the ethos of Bitcoin by offering a non-custodial wallet and not requiring ID verification.
AOPP doesn’t change any of that. It just makes stacking sats to a non-custodial wallet more user-friendly.