The weightiest Swiss broker of cryptocurrencies, Bitcoin Suisse, wants to upgrade to a banking license – in Switzerland.
Bitcoin Suisse is applying in Switzerland for a banking and securities dealing license, it said in a statement on Tuesday. The Zug-based broker was hit by bitcoin's 70 percent wipeout last year, but still managed to eke out a $21.5 million annual profit.
The step towards more regulation isn't entirely surprising: Bitcoin Suisse's flamboyant founder and co-CEO Niklas Nikolajsen (pictured below on Breithorn, a 4,164-meter peak near Zermatt, on July 14, 2019) told finews.com last year that he was deliberating whether a formal license made sense for the firm. Countless coins and tokens are only tradeable in Switzerland by securities dealers, which are licensed by Swiss financial regulator Finma.
(Image: Facebook Niklas Nikolajsen)
Competing with Banks
Founded in 2013 in Switzerland's «crypto valley,» Bitcoin Suisse said it wants to upgrade licenses so that it can expand its product and service offering. «Bitcoin Suisse is adapting to a changing regulatory landscape, where more and more crypto assets and services fall under securities and banking law,» it said on Tuesday.
Nikolajsen and co-CEO Arthur Vayloyan are vying to compete with banks, which are beginning to soften their opposition to digital assets. For example, Bitcoin Suisse offers loans against crypto assets as collateral.
Liechtenstein Flirt
The move is also a pledge to Zug and Switzerland: last year, the firm flirted with a move to Liechtenstein, which has been very accommodating of crypto and blockchain firms, as finews.com reported. Bitcoin Suisse recently poached Frick's blockchain guru for its Liechtenstein operations, and also maintains an office in Copenhagen, where Danish native Nikolajsen went to University.
Bitcoin Suisse joins several aspiring crypto banks including the Julius Baer-backed Seba, Sygnum, and Mt Pelerin, which are all fighting to be the first licensed Swiss crypto bank, as finews.com reported. Several people familiar with the process predicted Finma would opt to grant two licenses at the same time – a bid to give one project a head-start over the other.
Highly Profitable
Unlike the other crypto bank aspirants, Bitcoin Suisse is already making good money with a solid business model: it employs 90 people after a massive (and ongoing) hiring drive. Last year, it maintained fat margins that the banking industry can only dream of, posting a cost-income ratio of 33 percent.
Bitcoin Suisse said its equity stood at 50.1 million Swiss francs ($51 million), and that it expected the metric to rise to more than 58 million francs by the end of this quarter. It also said it has stowed 45 million francs with an undisclosed Swiss bank as collateral for a default bank guarantee, in order to secure client funds and pooled crypto deposits.
Maverick vs Establishment
Bitcoin Suisse has struck a compromise between the wild, disruptive, libertarian image cultivated by Nikolajsen and the financial establishment, which is well-represented at the company. Co-CEO Vayloyan is a well-respected Swiss banking veteran; last year, Bitcoin Suisse poached its head of institutional products and services, Lothar Cerjak, from Credit Suisse.
Switzerland's burgeoning cryptocurrency sector is closing in on taking institutional money, as finews.com reported. Until now, banks have largely sought to smother Switzerland's nascent but fast-growing crypto scene in the only way they can – by refusing to build a money bridge between institutional investors which would secure the liquidity that crypto providers have long awaited.
