Switzerland, the most secure nation on earth, advocating bank custody of crypto? Surely not…
How a bank or a regulator can offer any form of framework for protecting the custody of virtual currency is still an anomaly.
Switzerland is a fascinating country.
On one hand, it is the world’s most respected centre for financial security, its relatively small national stature being host to limitless wealth from across the globe, safeguarding the assets of international royalty, tycoons, large corporations and even some countries.
On the other hand, gambling is legal and casinos are out and proud, and the national banking regulator, FINRA, notorious for overseeing some of the most vault-like investment institutions in the world, advocates the licensing and trading of cryptocurrencies, one of the most certain routes to ruin ever known.
Switzerland sells the security. That is its national item of association. Throughout political and economic unrest, wars, instability and risk, Switzerland has always been the destination of choice for those looking to protect their interests.
Thus, it could be viewed that Switzerland is doing its best to secure the interests of cryptocurrency traders by ensuring that such exchanges and custodian entities are overseen by the authorities, or it could be that Switzerland is simply a great place to operate a legalized and fully regulated digital asset exchange in the knowledge that if one of a great many things that could go wrong actually does go wrong, FINRA is behind you.
Whichever way the line of thinking, this is accelerating and today, a Swiss digital asset lobby group, Crypto Finance AG, has made the sweeping and somewhat outlandish statement that ‘every bank will need a crypto-asset strategy.’
Rupertus Rothenhaeuser, who represents the Crypto Finance Group has said “Banks will need to both create the infrastructure for crypto assets and respond as trusted advisors to clients who are interested in investing in this asset class. This creates a challenging duality: the current financial system remains, and this new digital asset finance sector emerges. Securing the expertise of a specialised partner for trading and investing in crypto assets, and developing a digital asset strategy, is an efficient way to meet this need for innovation, in incremental steps.”
“With a new DLT law addressing crypto assets effective in February 2021, Switzerland is one of the few countries with this regulatory clarity. The securities house licence granted by FINMA to Crypto Broker AG – the brokerage firm of Crypto Finance Group – is one more step in making secure, reliable access to crypto assets possible for the finance sector” he said.
That is all very well, but the trail of disaster that lingers behind almost every person or entity that has attempted to offer investment in the digital currency is well documented.
Just ask the handful of FX brokerages which lost tens of millions of dollars in just one week in December 2017 for offering CFD trading on cryptocurrency, or any of those having been defrauded by light-fingered exchange owners who ran away with the non-existent ‘coins’ leaving investors with no recourse.
It is going to be of great interest to note how banks can be responsible for the custody of non-existent assets, and how regulators can provide any recourse for those who lose their shirts.
It’s a hard pass from me…