The CEO of Swiss startup SEBA Crypto AG said in an interview that five “large asset managers” from both Germany and abroad have shown interest in their cryptocurrency bank, Swiss financial media outlet Cash reports Nov. 12.
Back in September, the company had raised $103 million to set up a bank offering cryptocurrency-related services. At the time, CEO Guido Bühler had noted that the bank sees itself as a bridge between cryptocurrency assets and the traditional financial world.
In the November interview, Bühler noted that SEBA Crypto AG expects to receive a banking and securities dealer license from Swiss financial market regulator FINMA in the first half of 2019. That license would allow the firm to conduct crypto trading and investments business for other banks and qualified investors.
In September, SEBA had noted that it planned to start to expand its operations into major financial hubs beginning with Zurich in 2019.
According to Bühler, SEBA now intends to raise further growth capital of up to 200 million francs ($206 million) via an Initial Coin Offering (ICO). The CEO explaining the company’s goals, also noted that SEBA wants to offer custodian bank functions, going beyond the digital storage of crypto assets:
“As a general rule, crypto assets, just like investments in stocks and bonds, must be vested with our custodian bank function to the regulator.”
Earlier in November, FINMA had advised banks and other financial institutions via a confidential letter to estimate risk coverage for cryptocurrencies at 800 percent of current market value. The relatively high valuation suggests that the regulator views the investments as very volatile.
Nowadays banks aren’t ranked too high when it comes to public opinion. In fact, most people who initially got interested in crypto and blockchain, did so because of the lack of trust for the banking system. A new Swiss-based startup however, plans to unite cryptocurrencies and banking by creating the first crypto bank. SEBA Crypto AG managed to raise $103 million to create the crypto bank, which will offer cryptocurrency services. The ambitious project is headed by a couple of UBS bankers – Guido Buehler and Andreas Amschwand. SEBA aims to apply for a license from FINMA for banking and securities dealer.
Reuters reported the news first and if successful, the new crypto bank will be able to trade with cryptocurrencies and also handle investments from other banks and private investors. The new and exciting project can become a bridge between traditional banking institutions and the innovative crypto industry. Another exciting detail about the project is that it aims to provide many services for ICOs. The current state and reputation of ICOs is shaky to say the least and a stable bank helping out will be extremely beneficial. The new crypto bank will offer corporate financing and consultations.
A Crypto Bank will offer a lot of benefits to the crypto community
The chairman, Andreas Amschwand said that:
“In Switzerland we share a serious commitment from many authorities to establish and secure a comprehensive regulatory environment. We want both blockchain technology and crypto assets to enjoy this environment and have stable growth”
Zurich will be the first expansion of the project’s operations. The crypto bank plans for multiple expansions of its operations into many financial hubs starting in Q1 of 2019.
The Swiss Bankers Association (SBA) also took preventative measures earlier this month. They wanted to prevent a massive crypto exit from Switzerland coming from regulations. This is why, SBA came up with basic guidelines for the banks willing to work with blockchain startups.
The initial guidelines tell banks that blockchain projects without an ICO, should receive treatment similar to small and medium companies. Projects with ICOs however, have a strict set of rules to follow. They fall directly under the purview of the Swiss know-your customer (KYS) and anti-money laundering (AML) laws.
In August this year, a private bank began accepting crypto assets as a form of payment.
Maerki Baumman also began taking assets earned from mining. Although the bank does not offer a direct service to crypto-related investments, they offer to provide interested clients with experts on the subject.
Even earlier this year, another bank, Hypothekarbank Lenzburg became the first Swiss bank willing to provide business accounts to companies who are blockchain and crypto-related. The bank however, is extremely selective of the clients it works with has reportedly has taken only 2 companies from the crypto/blockchain industry as clients.
Switzerland’s financial market supervisor, FINMA held discussions with the country’s bankers’ association and the Swiss National Bank (SNB), on how to improve cryptocurrency ventures’ access to banks. This is in response to the exit by some crypto-enterprises that are opting to move their business to other territories.
SWITZERLAND THE CRYPTO-NATION
According to Reuters, Swiss regulators have been taking steps to maintain the country’s reputation as a cryptocurrency friendly jurisdiction and to prevent the departure of virtual currency projects that have traditionally had limited access to the formal financial system.
Over the years Switzerland has cultivated a reputation as one of the more cordial countries for cryptocurrency entities willing to set up shop or conduct ICOs.
In addition to having an aggregation of digital currency startups in a region recognized as Crypto Valley, the country has also expressed its support of cryptocurrencies as witnessed by the sentiments shared by the Swiss Economics Minister:
Now we have arrived at an innovative moment in the financial world. Cryptocurrencies are part of the fourth industrial revolution. We look at what possibilities can arise from it. For my part, I try to identify the opportunities, the risks and the opportunities, and decide: Is this a future business with future jobs or is it not? That’s why I support the circles that deal with it.
A few Swiss banks have already started offering Bitcoin futures and the country’s stock exchange announced plans to launch a cryptocurrency exchange.
Even large players like Bitfinex have given Switzerland a stamp of approval of sorts by considering the country as its permanent residence.
All of these factors have contributed to the crypto-nation tag that Switzerland is aspiring for. However, the real issue lies with an acceptance by the country’s bankers.
LIMITED ACCEPTANCE FROM THE FINANCIAL SYSTEM
Only a small number of Swiss banks have allowed cryptocurrency ventures to do business with them making it difficult for such projects to be domiciled in the country. The number of institutions that are warm to digital currency focused business is also shrinking.
At least two Swiss banks have reportedly withdrawn services to cryptocurrency projects and groups, further reducing the already limited pool of institutions that handle basic, essential services like accepting deposits. This has triggered the exodus that the country is now facing.
Some cryptocurrency entities that want to carry out ICOs have resorted to setting up bank accounts in other territories like Liechtenstein and Gibraltar where they have access to more traditional banking services and are able to easily access their funds.FIN
At the same time, the banks in Switzerland that still accept cryptocurrency deposits do so under strict conditions. These include policies to only bank with ICO companies that have KYC and AML procedures compliant with Swiss regulations.
Cryptocurrency companies are also asked to pay initial assessment fees of up to US$2,500 by the banks before securing their services. Faced with such conditions, cryptocurrency enterprises are exploring other options.
SOLUTIONS IN REGULATION & DIALOGUE
Swiss banks’ hands-off approach on cryptocurrency projects has largely been driven by concerns surrounding the lack of clarity on the rules and regulations that apply in the space.
Some of the stickier points have to do with fraud and money laundering – areas that have dogged projects like ICOs and are the major issues affecting the requirements for opening a bank account.
According to a statement from the Swiss Bankers Association (SBA):
Banks are currently hesitant to open business accounts for companies with particular touchpoints to ICOs and cryptocurrencies – due to risks such as fraud or money laundering.
Switzerland has been working on this, seeking solutions through dialogue and the crafting of regulatory frameworks that will add clarity to the situation.
The Swiss Finance Minister invited the SNB, SBA, and FINMA to a discussion on bank accounts for cryptocurrencies, after which the SBA set to work to compile a system of checks and conditions that could be followed when opening accounts for cryptocurrency firms.
These measures are major steps towards a solution for Switzerland’s problem with the flight of cryptocurrency businesses. Regulatory action regarding cryptocurrencies is often a slow process and the efforts being taken by the Swiss are notable.
It remains to be seen if they are enough to change bankers’ opinions on doing business with virtual currency outfits and more importantly, stop these cryptocurrency companies from leaving.
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