Bitcoin Suisse has struggled for years to open Swiss bank accounts. CEO Niklas Nikolajsen describes to finews.com the Swiss cryptocurrency broker's trip to the fringes of banking to find a firm willing to take his money.
Switzerland's crypto valley is big business, but digital token firms are having trouble getting Swiss banks to take their calls. Why? Traditional finance firms fear digital currency upstarts aren't applying the same anti-money laundering rules and so-called «know your customer» guidelines that banks are subject to in order to avoid ill-gotten funds.
The banks are also wary of potential fallout from a scandal like that now engulfing Tezos, where a bitter feud has erupted around its Swiss foundation.
The lucrative pull of transacting cash for the huge amounts of bitcoin, ether, and other digital currencies which trade hands every day isn't tempting enough for Swiss banks to dip their toes in, finews.com reported earlier on Wednesday. Dozens of startups are using blockchain technology to raise millions through initial coin offerings, or ICOs, by issuing new tokens.
Discreetly Denied
Swiss cryptocurrency exchange Bitcoin Suisse is a case in point. Founder and Chief Executive Niklas Nikolajsen told finews.com that his firm found it «very easy» to establish banking relationships in Switzerland when the firm was founded early in 2013. But those relationships crumbled one by one shortly afterwards, amid several scandals including the collapse of bitcoin exchange Mt. Gox and a U.S. raid on black marketplace Silk Road.
«The usual description we got was, 'Well you know your profile doesn’t suit our business'. You’re a bank, you're supposed to hold money – what is it about us doesn’t suit?,» he said.
Two years later, after asking 53 foreign and Swiss banks, Bitcoin Suisse finally managed to clinch a new Swiss banking relationship with a small firm, Neue Helvetische Bank. However, NHB is mainly a private bank, not a transactional house that can handle larger volumes that Bitcoin Suisse typically turns over monthly.
Unbecoming Behavior
Niklajsen says other Swiss firms, when acting as intermediaries on transactions, have simply withheld Bitcoin Suisse's funds, not admitted to holding the funds, frozen them, or even not returned – behavior unfitting of the professional and efficient image that the sector attempts to portray.
«The amount of harassment we have been subjected to from the banking sector is amazing,» Nikolajsen said.
Besides its ties to NHB, Bitcoin Suisse also banks in Liechtenstein, and continues to seek banking relationships in Switzerland.
Upbeat for More
Nikolajsen, a Danish entrepreneur who has been in Switzerland for four years now, clinched a key partnership three months ago with Falcon Private Bank, an Abu Dhabi-owned firm.
«The cryptocurrency industry is now of a size now where no one can ignore it, and this means the banks will engage. Falcon was the first bank to hold cryptocurrency assets, and we know of several Swiss and foreign working along the same lines,» Niklajsen says.
He is optimistic that more will follow: «We just need to see other cryptocurrency companies having a bit more of luck also getting a banking relationship. At the end of the day we want to build and industry that can create wealth and add jobs in Switzerland. We're not going to have a successful crypto valley without engagement from the banking side.»
