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Swiss private bank accepts bitcoin

Falconbitcoin

Bitcoins have taken a step towards acceptance by the Swiss banking community - Click to enlarge

Swiss private bank Falcon has become the first mainstream wealth manager in the country to allow clients to invest bitcoins in their portfolios. The Zurich-based bank has been given the green light to accept the cryptocurrency by the Swiss financial regulator.

Falcon has teamed up with cryptocurrency brokerage Bitcoin Suisse to offer the service. With the value of bitcoin and other cryptocurrencies soaring in recent months, the bank said it was responding to demand from clients. It has also installed a bitcoin ATM at its Zurich HQ.

One bitcoin was was trading at around $650 a year ago, but the price for the cryptocurrency currently stands at nearly $2,400 (CHF2,300). News of spectacular gains in a number of cryptocurrencies has sparked widespread interest in a financial asset that has been declared dead and buried on numerous occasions.

Lucas Betschart, President of Bitcoin Association Switzerland, believes the value of bitcoin will continue to rise in the long-term despite – at times – extreme volatility in the market. The combined worth of bitcoin globally stands at around $40 billion.

“I’m not aware of any other bank where you can hold bitcoins,” Betschart told swissinfo.ch. “This will allow people without technical know-how to hold bitcoins in a secure way. Hopefully it will send a signal to other banks in Switzerland.”

Initial scepticism

The mainstream banking community has not always welcomed cryptocurrencies with open arms. The decentralised blockchain technology on which it operates is viewed as a rival to the financial system.

Tracking flows of cryptocurrencies on blockchain is relatively simple, but it is not so easy to identify the identities of traders. This has led to concerns about such digital currencies being used for money laundering or tax evasion. This has spooked many Swiss banks that have been haunted by global tax evasion crackdowns in recent years. There have been reports of some Swiss banks refusing to accept cryptocurrency traders as clients, according to Betschart.

This makes Falcon’s accepting bitcoin into the traditional banking sector all the more significant. Falcon said it will apply ‘strict know your customer’ protocols to its clients using bitcoin to circumvent identity problems.

Bitcoin Suisse will provide the underlying infrastructure for Falcon. A Swiss bank offering bitcoin services is an “historic milestone”, Bitcoin Suisse CEO Niklas Nikolajsen said in a statement.

“Falcon Private Bank is, to my knowledge, the first private bank worldwide to offer crypto-assets directly to their clients,” he said. “A bank offering crypto-assets is a game changer, as it gives institutional clients and high net worth individuals a counterparty in regard to crypto-assets upon which they can rely: a regulated Swiss bank”.

Regulations easing

Falcon will now compete for clients with a range of start-ups in Switzerland offering encrypted digital currency asset management services. This includes Bitcoin Suisse and other companies such as Melonport that have set up in Switzerland’s growing Crypto Valley based around Zug.

The Swiss Financial Market Supervisory Authority (FINMA) has been taking steps in recent years to reduce entry barriers for financial technology (fintech) start-ups. Last year FINMA created rules to allow financial institutions to accept new clients digitally without the need for cumbersome paperwork and created a new category of license for those that accepted less than CHF50 million in deposits.

FINMA said it would not comment on specific cases but added that it has been in contact with several institutions in the last years in the field of cryptocurrencies. At the end of last year, Falcon had CHF14.6 billion of clients’ assets under management. The bank said it may consider adding other cryptocurrencies to its service in future.

Full story here
About Swissinfo
Swissinfo
SWI swissinfo.ch – the international service of the Swiss Broadcasting Corporation (SBC). Since 1999, swissinfo.ch has fulfilled the federal government’s mandate to distribute information about Switzerland internationally, supplementing the online offerings of the radio and television stations of the SBC. Today, the international service is directed above all at an international audience interested in Switzerland, as well as at Swiss citizens living abroad.
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