Seba Bank does not yet have the resources to press ahead with its plans for international expansion, the chair of its board of directors, Päivi Rekonen tells finews.com.
May was a testing time for crypto-currency banks, brokers and exchanges, with exchange volumes doubling to $2.3 billion from the previous record highs in March and February.
This caused many trading systems to be overwhelmed by the deluge of trades. Coinbase, Binance as well as other exchanges and brokers suffered temporary outages.
Zero «Downtime»
Zug-based Seba Bank’s systems weathering the storm and being able to trade crypto-currency volumes to the tune of over $1 billion during that turbulent month was a source of satisfaction for Zug-based Seba, Rekonen told finews.com. «We have always referred to Seba Bank as a technology company as well,» she said.
«In this context, we are very proud that our systems proved to be stable during the market correction that took place in May. We had zero 'downtime'.»
Usual Startup Growing Pains
Rekonen would not be drawn further on Seba Bank’s performance. Switzerland’s first crypto bank, along with Sygnum, has been operational for around 18 months and offers its clients trading, wealth management, financing solutions and custody services, all in cryptocurrencies or tokenized assets.
Seba went through the sort of upheavals that are not uncommon at startups in their early stages. Last July the then chairman of the board Andreas Amschwand left abruptly as did several other top members of staff.
Capital Hike
At the same time CEO Guido Buehler, a former UBS manager, pressed ahead relentlessly with expanding the range of products and services and concluded a financing round at the end of 2020 of over 20 million francs ($22 million).
Rekonen confirmed that a good five months later Seba intends to raise more funds. The former UBS and Credit Suisse banker said it was not so much the typical «burn rate» at startups which had required a further round of financing from existing shareholders and new investors.
Pressure Grows To Move Into Growth Markets
Seba has a timetable, and the developments in the crypto markets are making the bank implement it more forcefully. «Seba Bank's strategy is clear: we want to grow beyond Switzerland and serve a global market,» Rekonen said.
«To do this, we need to invest further in technology and human resources, as well as build an international presence.» She did not give details of the amount of money required.
Hong Kong, Singapore, Middle East
Nevertheless, plans seem to have been hatched. Rekonen said Seba wanted to open branches in Hong Kong, Singapore and the Middle East. Speed was of the essence because crypto markets and with them the international competition were growing at breakneck speed.
«We are in a perfect storm: the demand for digital assets is increasing tremendously, institutional investors are becoming very active in this topic and the international regulatory environment is increasingly contributing to establish the market,» Rekonen said, adding: «At the same time, there is more and more competition in the market.»
The Same Boat
There is also competition in Switzerland: The second crypto bank there, Sygnum, already has an office and an asset management license in Singapore. Sygnum is also rapidly expanding its product range. Crypto Finance Group already has a presence in Asia, while broker Bitcoin Suisse has offices in Vaduz and Copenhagen.
All for are in the same boat. Switzerland has one of the most progressive regulatory range for digital assets in the world, but the domestic market and volumes are too small for all four Swiss players.
Institutional Money
Their strategies are similar and are based on the assumption that cryptocurrencies and digital assets will become firmly established in financial markets and that they will be able to exploit their head start on traditional banks and asset managers.
However, the international environment is changing rapidly. Both in the U.S. and Asia the big banks and assets managers are beginning to build up crypto services. A lot of money has flowed into the crypto markets from institutional investors, particularly from family offices and hedge funds.
Going Global
Time will tell how severely this trend had been disrupted by the recent market turbulence. However, Seba wants to be ready to ride the big wave of institutional money expected to sweep into the crypto markets and is therefore expanding the relevant infrastructure.
The little bank with a staff of 80 is aiming high, but a startup with global ambitions constantly needs topping up with money and investors with the willpower and patience to support such growth plans.
