Half of Swiss banks open up to cryptocurrencies
The Swiss financial audit and consulting firm EY (Ernst & Young), has published its 2022 bank barometer. It highlights the optimism of the sector at the dawn of this year 2022 and the confirmation of a basic trend regarding the opening of traditional institutions to crypto-assets.
- The majority of Swiss banks are planning to offer investment products in crypto-currencies. This is the main finding of EY’s new Banks 2022 Observatory, particularly with regard to the topic of the crypto market. It surveyed 90 banking institutions.
- 55% of the banks surveyed in this observatory thus specified that they planned to launch an investment offer in crypto-assets in the next 3 years.
- There are, however, differences of opinion depending on the nature of the banks:
- Private banks are the most mature on the subject, with 68% of them emphasizing their interest in this type of digital asset.
- The proportion of institutions willing to offer crypto-currency investments to their clients within three years, on the other hand, drops to 50% for cantonal banks and 48% for regional banks.
- More broadly, 55% of banks surveyed said they believe crypto-currencies will establish themselves as an asset class in their own right (along with stocks and bonds) over the long term.
- 52% of banks also said that offering crypto-currency investment opportunities does not run counter to their sustainability goals.
- One step ahead: the Swiss market was opening up to the crypto-banking era as early as 2019 and was chosen as the home of the Diem association. In addition, the Spanish bank BBVA has chosen this country to test a commercial platform for buying, selling and keeping digital assets. It recently reinforced its system.
- An evolution to watch: The craze for crypto-assets is linked to that of customers and the ambition to offer investments with high growth potential. Still, the Bank for International Settlements (BIS) requires higher capital requirements on crypto-assets held by banks.
- A Bipolar Strategy: While sustainability remains a major issue for the majority of banks, 54% believe that offering cryptocurrency investment opportunities does not run counter to their sustainability goals.
Putting it into perspective
- Switzerland was one of the first countries in the world to codify digital assets into national law, after implementing the first phase of the so-called ‘blockchain’ law last year. Finma, the regulatory body for financial activities had also been the first to create a specific establishment status to regulate crypto activities.
- The Swiss example is worth following as it highlights a growing trend worldwide. In November 2021, Commonwealth Bank in Australia became the first bank in the country to offer a crypto asset trading service. The Italian bank Banca Generali has also invested in the FinTech Conio to offer crypto products.
- The market value of total crypto assets in circulation exceeded $2 trillion in September 2021, 10 times more than in early 2020. The International Monetary Fund reports on this exponential growth and the disintermediation challenges for central banks and commercial banks. It highlights the importance for authorities to issue central bank digital currencies and the need to adapt to technologies to avoid disruption.