As published on: finews.com, Tuesday 21 November, 2023.
Digital tokens and coin prices are on the way up. But this time there is something different about it all. When this rally fully kicks into gear, crypto will be everywhere, research by finews.com shows.
From today on, clients can invest in cryptocurrencies including bitcoin, ethereum, ripple, litecoin, polygon, and uniswap.» Surprisingly, that statement does not come from one of the many fintechs in the Swiss crypto-valley. It wasn't made by a private bank serving high-net-worth clients.
Instead, it was made by a retail bank. Zuger Kantonal Bank to be exact. It has been offering investment, trading, and custody services for crypto assets since October.
The Zugers are by no means alone. In November sister institute St. Galler Cantonal Bank followed suit.
If you take industry observers at face value, the coming weeks and months will see many other Swiss banks offering basic services related to digital tokens and coins. A crypto industry expert talked about 10 domestic institutes in the starting blocks, including the largest financial institutions in the country.
Activity and Inactivity
That means that the trend that became apparent last summer is coming true. A great deal was happening behind the scenes even though the trading volumes of digital assets fell beneath the already low levels a year earlier. Many were working on making crypto assets a fully-fledged asset class, with efforts afoot to distribute them on an industrial scale, as finews.com wrote in June.
Something else is also happening that will help adoption. Bitcoin has risen a good 120 percent since the start of the year while ether is worth two-thirds more now than it was then.
«On the client side, 2023 has proven to be a year of inactivity», Dirk Klee maintains. According to the CEO of Bitcoin Suisse, the largest – and oldest – crypto broker, the activity has remained high the whole time on the provider side. Investments continued to be made in infrastructure and platforms throughout the year. «These new structures are ready for the demand when the demand for digital assets increases again», he tells finews.com.
Return of the Crypto Millionaire
The valuations of tokens and coins have risen significantly since October. Some investors can even call themselves millionaires again. Bitcoin Suisse is feeling the direct impact of all that. According to Klee, the business has been growing strongly and the broker was in a position to book over 1 billion francs in inflows and capital gains.
The broker is still working towards getting a license for banking and asset management in Switzerland while the time seems to be ripe for those who have already managed the regulatory hurdles. They are the two crypto banks Syngnum and Seba as well as Crypto Finance, the Swiss fintech subsidiary of the Deutsche Boerse Group.
It will be Sygnum that provides the infrastructure for Zuger Kantonal Bank's offering. St. Gallen, on the other hand, will use the services of Seba Bank. Crypto Finance is already working together with over 20 banks and 40 asset managers, including international banks, a spokesperson indicated when asked.
Other institutional market participants are actively working on crypto offerings, the spokesperson continued. «The Crypto Finance Group is holding talks with the banks and large financial institutions.» In the area, Switzerland remains a pioneer.
Prepared for the Recovery
Sygnum also has its work cut out for it. The crypto bank serves more than 15 Swiss and international financial institutes. Besides Zug, it also has a relationship with Postfinance and the Lucerne Cantonal Bank. «We have a strong pipeline of corporate clients with many partners who are actively getting ready for client demand when the market rally comes», a Sygnum spokesperson says.
They also confirm that many banks in Switzerland and abroad are pursuing similar strategies for entering the digital asset market. As part of that, they want to future-proof their offering, preventing outflows for clients they already have, while increasing earnings from expanding into new markets.
Wealthy Don't Want to Just Speculate
Seba Bank, which provides St. Gallen Cantonal Bank with digital asset services, is also talking to a number of banks. «We are expanding our network while the interest in cryptocurrencies grows», it indicates. Besides, St. Gallen, Zurich-based private bank Julius Baer is a client as is Liechtenstein's LGT.
Bitcoin Suisse also wants to see crypto reach the retail sector. This is despite the fact that it is mainly interested in offering services to high-net-worth clients, asset managers, and family offices. Having a base offering will help vault the digital asset market into the higher leagues and become a fully-fledged asset class, according to its CEO Klee. Wealthy clients no longer want to just speculate with crypto, they want to have their digital assets form part of their overall portfolio and be professionally managed.
No Longer Up for Sale
It looks like an impending breakthrough and a broader market with deeper trading volumes could hint at a spring thaw at the end of the long so-called crypto winter. That would be a welcome change for digital asset providers such as Bitcoin Suisse.
«We are in talks to strengthen our capital base in a way that enables further growth», Klee indicates. From his vantage point in Zug, things are looking pretty optimistic right now and there are no talks to sell the company at all right now, something that had been speculated at various junctures in the past.