The Swiss crypto broker halted efforts for a banking license, after the Swiss regulator said it isn't doing enough to fight money laundering.
Zug-based Bitcoin Suisse is withdrawing its application with Swiss financial regulator Finma for a banking license, it said in a statement on its website on Wednesday. The start-up said it consider reapplying when it has introduced «measures that respond to the strong growth of its business».
The Bern-based regulator was clearer: it considers Bitcoin Suisse «ineligible for approval and that the prognosis is unfavorable,» it said in a statement. «Among other things there are indications of weaknesses in the money laundering defense mechanisms,» Finma said.
Massive Client Demand
The move is a serious blow to the eight-year-old crypto broker which is flush with cash, storming towards a double-digit million profit for 2020, and currently grappling with surging client demand amid bitcoin hitting $50,000. It operates as a financial intermediary, which means it is largely self-regulating without any involvement from Finma.
Co-founded by Niklas Nikolajsen and run by Arthur Vayloyan, the company had wanted to conduct a security token offering, or STO, in order to place its privately-held shares onto blockchain. Bitcoin Suisse raised 45 million francs ($49 million) early last year, including from former Vontobel top banker-turned-investor Roger Studer.
Winnowing Clients
Founded in 2013, Bitcoin Suisse applied for a banking license mid-2019. Already the leading crypto broker in Switzerland then, Vayloyan told finews.com on Wednesday that the company is in an entirely different place now. It turned over 1 billion francs in volume last month alone – ten times higher than two years ago.
Bitcoin Suisse recently winnowed who can open an account to trade cryptocurrencies, saying it is swamped with demand as bitcoin surged past $50,000. Private clients now need to pony up at least 100,000 francs, while institutions wanting to buy and sell cryptocurrency will be subject to a 500,000 franc minimum.
Surge In Profit
In terms of a banking license, Bitcoin Suisse appears to be a victim of its commercial success: Finma requires a licensed-like environment to assess whether to grant it bank status, Vayloyan told finews.com. Since the crypto broker has grown by leaps and bounds and invested heavily in its infrastructure and procedures, this proved difficult.
Finma simply couldn’t accurately identify what exactly what to approve, Vayloyan said. He didn’t elaborate on when Bitcoin Suisse might re-apply. The company expects more than 15 million in net profit on revenues of over 45 million francs, it said.
Peter Hody contributed reporting
