Recently, the Swiss Financial Market Supervisory Authority (FINMA) has made an announcement that has come as a relief to two “pure-play blockchain service providers” who can now serve as crypto banks for the industry. This is being perceived as a giant step for the digital asset industry as one of the pressing problems is to search for a bank that offers to provide a link with the traditional fiat financial system, and thus, in turn, also agreeing to do business with them. The Swiss financial regulator has decided to issue licenses to SEBA Crypto AG and Sygnum AG, which are registered in Zug and Zurich (both in Switzerland) respectively, to function as “tailored” banks for the crypto sector. Thus, they are the new crypto banks that can provide banking services to professional crypto clients subject to the supervision by FINMA and will open the Swiss financial market, which is already one of the most developed markets in the world, to new institutional clients and investors.
FINMA had already brought out a guidance paper on how the application of Anti-Money Laundering (AML) rules which are followed in Switzerland, are to be extended to blockchain technology companies. In June this year, the Financial Action Task Force (FATF) had also issued “guidelines on cryptocurrency regulations,” and as per the guidelines, the FINMA declared that in the case of conventional bank transfers, the transfer of tokens must mandatorily involve information about the client and the beneficiary with a few exceptions. FINMA supervised institutions can send or receive cryptocurrencies or tokens to external wallets of customers with verified identities and are therefore forbidden from sending or receiving tokens from other customers whose identity is unverified or anonymous. This rule is also extended to unregulated wallets unlike proposed under the FATF guidelines and thus, the Swiss market is looked upon as one with very stringent AML regulations.
SEBA Crypto AG is expected to bring into force co-operation with Julius Baer, a 125-year-old private bank in Switzerland, which it had already announced earlier. It is being anticipated that SEBA will start its operations as a crypto-bank from October. The chairman of the Board of SEBA, Andreas Amschwand, has said in this regard,
The banking license of the FINMA is not a milestone for SEBA, it sets a new standard for banking in the blockchain and digital asset economy. This moment has significance far beyond the Swiss financial authority.
Sygnum AG has built a banking solution that intricately links the crypto and other digital assets into the traditionally regulated banking system. This was developed in partnership with Swisscom and Deutsche Borse Group and its co-founder and chairman, Luka Muller-Studer remarked,
To date, a lack of institutional-grade custody and a truly integrated banking solution has slowed the adoption of digital assets by institutional assets.
Although Switzerland has stringent AML regulations, it also aspires to become one of the important global epicenters for digital finance and digital financial technology as it has been with regard to foreign capital. Unlike the USA and other European countries, Switzerland offers a more open ground for crypto businesses which is testified by recent developments like Facebook planning to manage the Libra coin from its establishments in the country. The step towards providing licenses to these Bitcoin banks, although accompanied by strict conditions can also be seen as further advancement in this regard.