Switzerland has established itself as a leading location in the world for cryptocurrency companies and services. United under the name “Crypto Valley,” many companies have settled in the small country. But as the example of Swissquote confirms, local companies have also adapted.
With the settlement of the first blockchain companies in the Zug region from 2013, the foundations for a thriving crypto ecosystem were laid early on. Politics and regulation provided the necessary legal certainty, which is still lacking in other states today. This is how the first Swiss banks, including the online bank, were able to Swissquote, already in 2017 to integrate trading with digital assets into their offer. Today, the banking group holds over CHF50 billion in client funds, with cryptocurrencies accounting for about a fifth of its revenue. In an interview with CVJ.CH, Head of Institutional Sales Robin Lemann describes the history, strategy and future of digital assets at Swissquote.
CVJ.CH: How long has Swissquote been involved in the cryptocurrency markets?
Robin Lemann: In 2017, Swissquote was the first Swiss bank to give its clients access to the cryptocurrency markets. In the beginning, customers traded and held bitcoins (BTC) and ether (ETH) became possible, and then quickly expanded to other cryptocurrencies such as Bitcoin Cash, Litecoin, and Ripple. In the ensuing years, products and services have been continuously expanded. Today, clients can trade over 34 cryptocurrencies, numerous ETFs, ETPs and leveraged products on cryptocurrencies, as well as transfer and stake many tokens to and from Swissquote.
How did you decide to offer your clients trading opportunities in cryptocurrencies relatively early on?
Since its inception, Swissquote has been committed to providing its clients with transparency, integrity and objective information to enable them to make informed decisions independently. Swissquote was also the first bank to offer investors real-time access to all securities traded on the Swiss stock exchange. Researching new trends and technologies and making them accessible to its investors is paramount in the bank. And that’s been the case with the topic of blockchain and its associated crypto assets. It was a significant milestone for the bank in 2017 when it became the first bank to introduce the five cryptocurrencies (Bitcoin, Bitcoin Cash, Ether, Litecoin and Ripple) – enabling customers to easily and securely trade in this alternative asset class.
Is this a focus or is the crypto endeavor just a side business?
Cryptocurrency investments are growing in popularity among private and institutional clients. In 2021, Swissquote recorded record values with an income of over CHF 472 million, and the crypto business managed to make a significant contribution to the income with a contribution of around 20%. The crypto business is thus another source of income for Swissquote. The range of products and services is constantly expanding.
What cryptocurrency services does Swissquote offer and are there any plans to expand the offer?
Swissquote currently offers more than 34 currencies for trading and custody, and the crypto assets offering is constantly expanding. Swissquote also offers the option to transfer cryptocurrencies to and from the bank. This is currently possible with Bitcoin, Ether, and Tezos. Since the beginning of 2022, customers have been offered the option to bet, with three cryptocurrencies currently on offer. The next big hit It will be your crypto exchange, which will be launched later this year. Swissquote will operate its own central order book with its own liquidity providers and market maker. Swissquote clients will be able to trade existing and additional currency pairs (such as BTC/CHF, BTC/EUR, BTC/GBP, ETH/CHF, etc.) around the clock (24/7) at attractive conditions.
How does the typical cryptocurrency investor outperform your platform? Is he an active retail trader or more of a cryptocurrency saver?
Our client profiles vary greatly. From very active private clients to clients who have added cryptocurrency to their portfolio, to large institutional clients who custody and trade with us. Basically, it can be said that the average age of Swissquote’s cryptocurrency end customer is between 40 and 60 years old and that 90% of cryptocurrency investors also have other investment classes such as stocks or bonds.
Why are Swiss-based money houses so reluctant to use digital assets as compared to Wall Street banks?
If a financial institution wants to create its own crypto offering, it has to overcome a number of organizational, strategic and technical hurdles. If the institute wants to prepare such a presentation on its own, it needs a lot of preparation time, knowledge and resources. In addition, it is rather complicated and sometimes there is not enough understanding of the market and technical knowledge. This is where companies like Swissquote can offer support. As a FINMA-regulated bank, we are able to provide professional support in the areas of trading, custody, legal, compliance and training.
Are financial institutions that do not deal with the new asset class missed opportunities?
The company’s range of products and services are always closely related to the company’s overall strategy and philosophy. It may not make sense for certain financial institutions to create a cryptocurrency offering. However, in my opinion, companies in the financial sector should definitely deal with the possibilities and opportunities of blockchain and crypto assets.
Is cryptocurrency an alternative asset class for you?
Today, cryptocurrencies can make a positive contribution to portfolio diversification in the field of alternative investments. (However, it should be noted that crypto assets can be subject to high volatility). There are significant differences between the different icons. For example, there are three types of tokens: payment tokens (such as cryptocurrencies that are accepted as payment for the purchase of goods or services), utility tokens (which provide access to a digital use or service) and asset tokens (assets that represent assets such as stocks). bonds or derivative financial instruments). In the future, the tokens can be expected to reintegrate into the respective asset classes according to their classification. In this way, many new areas of application can be created, but crypto assets do not necessarily have to represent a new asset class in and of themselves.
Are there particular developments in the region that you are particularly looking forward to?
At the moment there are very exciting developments in the fields DeFiAnd the NFT or Metaverse instead of. I believe that various fields of application are still in their infancy and countless new possibilities will emerge. For example in the field of payment transactions, payment processing, monitoring the rights and obligations of specific financial instruments, the Internet of Things (IoT) but also in the field of marketing and advertising opportunities. Specifically at Swissquote, I am of course particularly looking forward to the launch of our own exchange, the further expansion of the cryptocurrency offering and its transferability and storage. It sure will be exciting.
Robin Lemann has been with Swissquote since November 2021. As Head of Institutional Sales, he manages sales for institutional clients and is also responsible for the “Crypto Asset Solutions” area for financial institutions at Swissquote Bank in Zurich. Robin Lemann has over 20 years of experience in the financial industry. During his career, he held several senior positions in the areas of trading, marketing, sales and distribution in international companies.