We talk to the CEO of a Switzerland-headquartered bank with international reach and ambition. With turbulence continuing in the world of digital assets, and a complex regulatory landscape, the firm argues that it is well placed to capitalise.
It is an understatement that the cryptocurrency and digital
assets space has faced problems in recent years. With the
FTX collapse and legal consequences, the implosion of some
“stablecoins,” and the US SEC’s charges against
cryptocurrency exchange Binance – life has been difficult.
In all this furore, straddling traditional banking and digital
worlds, and operating in the more liberal and stable
jurisdictions for digital assets, is a bonus. That is the boast
of SEBA Bank, an
organisation headquartered in Zug – part of Switzerland’s “crypto
valley” – with a licensed business in Abu Dhabi, UAE, and an
office in Mumbai, India. It also opened a Hong Kong subsidiary
office in November 2022. At the time of writing, SEBA (Hong Kong)
Limited has been in discussions with the relevant authorities in
Hong Kong about securing a licence.
Demand is so strong for a bank that can onboard “crypto natives”
as efficiently as traditional clients who want a piece of the
digital assets pie, that it is proving quite a challenge to keep
up, Franz Bergmueller, SEBA’s chief executive, told this
publication in a call.
“More people are knocking on our door than ever before…the
funnels of people who want to bank with us are wide,”
Bergmueller, who joined the bank in April 2022, said. “People are
crying out for accounts and access to services.”
“We are probably the only bank that does crypto and digital
banking,” he continued. SEBA does not have a retail offering.
Clients must have the status of accredited investor, or the
equivalent. It also conducts commercial and institutional
business and works also on a B2B basis with other banks, asset
managers, miners of cryptocurrencies, family offices and many
more.
In today’s world of tight compliance and risk management, SEBA
Bank must be “super careful” with its checks, he said. But that
quality control is also an important hallmark of the bank, he
continued. One benefit for SEBA, Bergmueller said, is that
contrary to predictions of how banks will be disintermediated in
a new digital world, the need for institutions with a balance
sheet and expertise is as strong as ever.
Digital ferment
There is little doubt that the wealth sector is showing lots of
interest in the space. A survey of family offices around the
world by BNY Mellon Wealth Management, published in March 2022,
found that 77 per cent of them have some interest or involvement
in cryptocurrencies. In its annual wealth report of 2022, Knight
Frank said that 60 per cent of respondents to its survey cited
blockchain technology as an increasing opportunity. It found that
clients ask for 1 to 5 per cent of their portfolios to be in
cryptos.
SEBA’s Zug home base is a powerhouse. There were about 1,128
blockchain companies in Switzerland and the neighbouring
principality of Liechtenstein at the end of 2021. The Swiss
government implemented the legal basis for distributed ledger
technology in 2021 and for listing security tokens on regulated
secondary markets. (See related stories about Switzerland”s
digital assets industry here
and
here.)
A 2021 Goldman Sachs
survey found that nearly half the family offices it conducts
business with want to add digital currencies to their stable of
investments, with the closely held firms seeing crypto as a
possible hedge for higher inflation and prolonged low interest
rates. Almost half of respondents to that Goldman Sachs report
said that they are thinking of moving into digital assets such as
bitcoin, although most are not currently in this space. Their
main reason for caution is that they are sceptical of whether
cryptocurrencies are a store of value. (Goldman
Sachs polled more than 150 family offices.) Major
institutions, including JP Morgan, Morgan Stanley, Julius Baer,
Guggenheim Partners, and others, are involved. SC Ventures,
Standard Chartered’s innovation and ventures unit, partnered with
Northern Trust to launch Zodia, a cryptocurrency custodian for
institutional investors.
