SEBA Crypto AG, A Swiss-based start-up has made public its plans to build a crypto bank that will serve both investors and companies. The total funds raised for the project amount to 100 million Swiss francs.
Bridging the Crypto Gap
The decision to set up the crypto bank was reached by the Board of SEBA Crypto AG after a deep analysis into the gap that exists between the traditional banking systems and the crypto economy in the country.
Currently, mainstream banks are shying away from transacting business with crypto companies for fear of attracting heavy penalties from the industry regulator. Currently, there are more than 500 crypto start-ups in Switzerland, many of which are in Zurich and Zug.
Despite the record growth in crypto companies, challenges still exist in the Swiss financial services industry that threatens to limit access to basic banking services. For instance, account opening for crypto companies is still a tedious and lengthy process which hopefully the recently proposed SBA guidelines will simplify.
The target clients for the crypto bank will be qualifying cryptocurrency investors and traditional corporate clients.
Banking and Security Dealer Licensing
Under the leadership of Guido Buehler, the chief executive, and Andreas Amschwand, the chairman, both of who are from UBS managers, SEBA said that it is seeking approval for a banking and security dealer license. This will enable the group to manage trading and investments in cryptocurrencies for both banks and investors.
FINMA, the market regulator confirmed that indeed they have received the application for licensing from SEBA and that talks are at an advanced stage on the matter.
If this goes through, SEBA will have positioned itself at a vantage point in market leadership in the convergence of crypto economy and the traditional banking space.
Safety and Transparency Concerns
Operations of many crypto companies in Switzerland have been accused of laxity in conducting due diligence with respect to the source and use of their funds both in ICOs and non ICOs. Swiss has strict a legislative framework on money laundering and any suspicious deals can lead to license revocation and prosecution.
This is the reason many banks in Switzerland have been hesitant in commingling with the crypto industry. That said, SEBA is looking at bringing on board, transparent and safe procedures that will ensure each player stays on the right side of the law and doesn’t bear the unwelcomed risk.
The approval of the crypto bank by FINMA will be a bold statement by the regulator and the industry, to create a supportive environment for crypto companies. This will go a long way in positioning Switzerland as the ideal global financial hub.
The main investors in the yet-to-be-formed bank are BlackRiver Asset Management, a Swiss-based company and summer capital, a Hong-Kong based establishment. Other backers are drawn from Singapore, Switzerland, China, Malaysia, and Hong-Kong. Operations are scheduled to begin in Zurich in 2019.