Traditional financial institutions still have reservations about decentralized cryptocurrencies. A decade after Satoshi Nakamoto unleashed bitcoin on the world in response to the global economic meltdown, they are only just beginning to explore the potential of digital assets. However, a new breed of banks specializing in crypto have been working tirelessly to capitalize on the fiscal trend and are now gaining regulatory recognition around the world, Bitcoin.com reported.
Swiss crypto banks
Switzerland has become a leading crypto-friendly country and several hundred companies are currently operating in Crypto Valley, which is situated in the canton of Zug. The country’s financial regulators are taking an increasingly positive approach to the nascent sector. Traditional banks have been reluctant to serve entities dealing with cryptocurrencies but competition from new businesses focusing specifically on the crypto market is likely to change that.
In August, the Financial Market Supervisory Authority (Finma) licensed two companies to provide banking services to Swiss-based crypto businesses and also trade securities. Zug-registered Seba Crypto and Zurich-based Sygnum became Switzerland’s first regulated crypto banks, Bitcoin.com reported. Another entity working with digital assets, Bitcoin Suisse, applied for a banking and securities dealer license this summer. A new Swiss venture called Tallyon expects the green light from Finma to allow it to become a “next-generation” private bank employing blockchain tech and working with cryptocurrencies.
These companies are not restricting themselves to Switzerland. In late October, Sygnum was granted a capital markets services license in Singapore. According to a report by Swissinfo, the Monetary Authority of Singapore (MAS) has authorized the crypto bank to provide asset management services in the Southeast Asian city-state. Seba Crypto, which is currently focusing primarily on its upcoming launch in Switzerland, is in talks with the MAS but has not yet applied for a license. It plans to enter a number of other markets including Hong Kong, the UK, Italy, Germany, France, Austria, Portugal, and the Netherlands. Tallyon plans to expand into Asia after its launch in the alpine country.
In a press release published on its website, Sygnum revealed that its first product will be a multi-manager fund that “allocates investments across a portfolio of managers that tap into the global digital asset opportunity using different and uncorrelated investment strategies.” It will be available to institutional and private qualified investors in Switzerland in the future as well, through the company’s banking platform there. In partnership with the largest German stock exchange and Swisscom, Sygnum is also working to launch a new digital asset trading venue.
Tencent’s ‘virtual bank’
The expansion of the crypto industry in any jurisdiction inevitably creates demand for related banking services. China’s recent focus on blockchain development is likely to have the same effect. Some Chinese companies are already moving to take advantage of the changing environment that creates new business opportunities.
Tencent, the tech and internet giant behind the popular messenger Wechat, was recently granted a license from the Hong Kong Securities and Futures Commission (SFC) that will allow it to establish a “virtual bank.” Speaking at the World Blockchain Conference in Wuzhen on November 8, Cai Weige, general manager for blockchain at Tencent, revealed the holding is already assembling a team for the financial platform.
According to Chinese media outlets, the forum was devoted to blockchain, digital assets, central bank digital currency, artificial intelligence, and 5G. During his keynote speech at the conference, Cai noted that blockchain and cryptocurrencies receive more attention now that the Hong Kong government has begun to regulate crypto transactions.
The SFC recently established a new regulatory framework that allows crypto exchanges to opt-in to be licensed and regulated. Trading platforms can now apply for a license if they meet certain requirements, including the implementation of measures to guarantee the safe custody of crypto assets.
“The framework will enable virtual asset trading platforms to be regulated by the SFC, a major development which builds on a way forward I outlined at the same time last year,” SFC Chief Executive Ashley Alder said, according to a Cointelegraph report last week.
Also read: HK unveils regulatory framework for crypto