Multiple joint projects between banks and crypto companies based in Switzerland now offer customers the opportunity to invest in digital assets and take advantage of banking services related to cryptocurrencies. It’s all happening in a regulated environment, generally friendly towards the growing crypto industry. The latest partnership between a traditional institution and a fintech startup aims to provide wealthy clients with access to major cryptocurrencies.
Switzerland to Become the World’s Crypto Bank
Switzerland, which has long ago established itself as the world’s bank, has had its image tarnished a little bit in the past couple of decades. The Alpine federation gave up some ground under international pressure, mostly from the United States and the European Union, to lower the level of banking secrecy and raise taxes to match the rates in neighboring jurisdictions.
But cryptocurrencies now offer the Swiss a chance to redeem themselves to a certain extent and also restore some of their positions in the banking field, in an alternative but very promising sector. Swiss banks, one after the other, are taking this new opportunity. The latest entry in what has become a long list is Arab Bank (Switzerland) Ltd., a member of the Jordanian Arab Bank Group.
The subsidiary is based in Zug, the very center of the Swiss crypto valley. Over 750 crypto businesses from around the world have established presence in the valley, which has already spread over to other cantons and neighboring Liechtenstein. Arab Bank’s Swiss entity recently joined forces with the blockchain technology firm Taurus to provide its customers with access to cryptocurrencies.
The partners intend to launch a range of services related to digital assets, Swissinfo reported. These include custody and brokerage for holdings in the two largest coins by market capitalization, bitcoin core and ethereum. The services will be based on the crypto company’s “Taurus Protect” storage platform designed to provide banks, exchanges and asset managers with institutional-grade vault services for digital assets.
Commenting on the announcement, Arab Bank Switzerland CEO Serge Robin shared his belief that blockchain technology will disrupt the financial industry as it is known today. “We intend to be amongst the first banks to offer digital asset services to our clients in a secure and regulated environment,” the executive emphasized.
The bank has embarked on the project in response to demand from some of its wealthy clients who wished to add cryptocurrencies to their investment portfolios. So far, many traditional financial institutions have refrained from offering products related to decentralized money, fearing regulations that oblige them to freeze serious amounts of reserve capital.
Crypto Startups Enter the Equation
That’s where young crypto companies become part of the solution, providing services to a bank’s clients that are safely separated from its main activity. Also, smaller banks around the world have been more willing to engage with the crypto space in a bid to reap the benefits of being the first to establish a foothold in this rapidly developing market.
Other Swiss banks have already blazed a trail where Arab Bank is now heading. Bank Vontobel is also in a partnership agreement with Taurus. The two are running a platform called Digital Asset Vault which institutional investors can use to store and trade cryptocurrencies outside their balance sheets. The service is offered to clients who don’t want to deal with the technical side of owning coins.
A similar service was announced this year by Gazprombank (Switzerland) Ltd., the local subsidiary of Russian state-owned giant Gazprombank. Its digital asset management product is offered in cooperation with two fintech companies, Avaloq and Metaco. It is based on Metaco’s crypto asset custodial solution called Silo.
Also in 2019, the year that saw a revival of investors’ interest towards digital assets, one of the largest financial institutions in Switzerland, 125-year-old private bank Julius Baer, revealed it’s entering the market via a partnership with crypto banking startup Seba Crypto AG. The latter, together with another banking solutions provider in the space, Sygnum AG, was recently granted banking and securities dealer’s licenses by the Swiss Financial Market Supervisory Authority, as news.Bitcoin.com reported.
Alternative Sources of Revenue
The need to find alternative revenue sources also pushed another Swiss bank to seek new opportunities in the cryptocurrency market. Last year, it became clear that Maerki Baumann was interested in providing services to participants in the nascent industry. This past summer, CEO Stephan Zwahlen shared the bank’s “ambition to be the go-to private bank in the Swiss crypto arena.” But it already has competition – Hypothekarbank Lenzburg, 150-year-old legacy bank, has been opening accounts for crypto businesses since last year.
Several other banks and fintech entities in Switzerland offer services related to crypto investment, trading, and digital asset storage. Falcon private bank and digital trading platform Swissquote have found partners in the crypto industry to provide clients with custodial solutions and facilitate their participation in crowdfunding through the issuance of tokens. Bank Zarattini has teamed up with Inacta, a crypto-financial services provider, to extend similar services.
Crypto banking doesn’t necessarily have to involve traditional financial institutions, however. A partnership between two leading crypto companies, Bitcoin.com and Cred, allows customers to earn interest on their holdings. The rates are much higher than those in the fiat world – up to 6% on bitcoin cash (BCH) and 10% on bitcoin core (BTC) invested with the Credearn product.