Switzerland has established itself as the world’s leading place for crypto companies and services. The United States is nicknamed “Crypto Valley”, many companies are established in the small state. But as the example of Swissquote underlines, local companies are also adapted.
With the settlement of the first blockchain companies in the Zug area from 2013, the foundations for a flourishing crypto ecosystem were laid early. Policies and regulations offer the necessary legal security, which is still not the case in other nations today. The first Swiss banks, including the online bank Swissquote, were able to integrate trading in digital assets into their offerings as early as 2017. Today, the banking group holds more than CHF 50 billion in customer funds, with cryptographic accounting for approx. one fifth of its income. In an interview with CVJ.CH, Head of Institutional Trading Robin Lemann describes the history, strategy and future of digital assets at Swissquote.
CVJ.CH: How long has Swissquote been involved in the crypto markets?
Robin Lemann: In 2017, Swissquote was the first Swiss bank to give its customers access to the crypto market. At first, customers could trade and store Bitcoin (BTC) and Ether (ETH), and then the range was quickly expanded to include other cryptocurrencies such as Bitcoin Cash, Litecoin and Ripple. In the years that followed, the products and services were continuously expanded. Today, customers can trade more than 34 cryptocurrencies, various ETFs, ETPs and leveraged products on cryptocurrencies, as well as transfer and trade multiple tokens to and from Swissquote.
How did you decide to offer your customers trading opportunities in cryptocurrencies relatively early?
Since its inception, Swissquote has been committed to providing its clients with transparency, integrity and objective information to enable them to make informed decisions on their own. Swissquote was also the first bank to offer investors real-time access to all securities traded on the Swiss exchange. It’s in the bank’s DNA to look for new trends and technologies and make them accessible to its investors. And so it is with the topic of blockchain and associated crypto assets. It was an important step for the bank in 2017 when it became the first bank to offer five cryptocurrencies (Bitcoin, Bitcoin Cash, Ether, Litecoin and Ripple) – which allows customers to easily and securely trade in this asset class alternative
Is this a focus or is the cryptocurrency initiative just a side business?
Crypto investments are becoming increasingly popular with private and institutional clients. In 2021, Swissquote recorded record value and revenue of more than CHF 472 million. The crypto business could make a substantial contribution to revenue with a contribution of around 20 percent. The crypto business is thus another source of income for Swissquote. The range of products and services is constantly expanding.
What cryptographic services does Swissquote offer and are there plans to expand the offering?
Swissquote currently offers more than 34 currencies for trading and custody, and the crypto assets they offer will continue to expand. Swissquote also offers the option to transfer cryptocurrency to and from the bank. This is now possible with Bitcoin, Ether and Tezos. Since the beginning of 2022, customers have been offered the option of staking, and the offer now includes three cryptocurrencies. The next big thing will be their own crypto exchange, which will launch later this year. Swissquote will operate its own centralized order book and liquidity provider with its own market maker. Swissquote clients will be able to trade existing and additional currency pairs (ie BTC/CHF, BTC/EUR, BTC/GBP, ETH/CHF etc.) around the clock (24/7) under attractive conditions.
How does the typical crypto investor fare on your platform? Is it an active retailer or more of a crypto saver?
Our customer profiles are very different. From highly active private clients to clients who have added cryptocurrencies to their portfolios, to large institutional clients who handle custody and trade with us. Basically, it can be said that the average crypto end customer at Swissquote is between 40 and 60 years old and 90% of our crypto investors also hold other investment categories such as stocks or bonds.
Why are established money houses in Switzerland reluctant to use digital assets compared to established Wall Street banks?
If a financial institution wants to establish its own crypto offering, it has to overcome a number of regulatory, strategic and technical obstacles. If an institute wants to set up such an offer on its own, it needs a lot of preparation time, knowledge and resources. In addition, the problem is rather complex and sometimes there is not enough market understanding and technical knowledge. This is where companies like Swissquote can offer support. As a FINMA regulated bank, we can offer professional support in the areas of trading, custody, legal & compliance and training.
Are financial institutions that don’t deal with new asset classes wasting opportunities?
A company’s range of products and services is always linked to the company’s overall strategy and philosophy. It may well be that it makes no sense for specific financial institutions to establish a crypto offering. However, in my opinion, companies in the financial sector should definitely face the possibilities and opportunities of blockchain and crypto assets.
Are Cryptocurrencies an Alternative Asset Class for You?
Today, crypto values can make a positive contribution to the diversification of a portfolio in the area of alternative investments. (however, it should be noted that crypto assets can be subject to high volatility). There are big differences between the different signs. For example, there are three types of tokens: payment tokens (such as cryptocurrencies that are accepted as a means of payment for the purchase of goods or services), utility tokens (which provide access to a digital use or service) and asset tokens (they represent assets such as stocks, bonds or derivative financial instruments). In the future, it can be expected that the markers will then be reintegrated into the respective classes according to their categorization. In this way, many new application areas can be established, but crypto assets do not necessarily represent a new asset class in themselves.
Are there any developments in the area that you are especially looking forward to?
At the moment there are very interesting developments in the field of DeFi, NFT or Metaverse. I think that the various fields of application are still in their infancy and countless new possibilities will arise. For example in the area of payment transactions, payment processing, monitoring rights and obligations in specific financial instruments, IoT (Internet of Things), but also in the area of marketing and advertising opportunities. Especially in Swissquote, I am of course particularly looking forward to the launch of our own exchange, the further expansion of the cryptocurrencies offered and their transferability and staking. It’s definitely going to be interesting.
Robin Lemann has been working at Swissquote since November 2021. As Head of Institutional Sales, he manages sales to institutional clients and is also responsible for the “Crypto Assets 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 various positions in the fields of trade, marketing, sales and distribution in global companies.