Switzerland To Start Operating Next Month Two Licensed Banks For Cryptocurrency
Switzerland's national flag flies below a logo of Swiss bank Credit Suisse at its headquarters at the Paradeplatz square in Zurich, July 31, 2019. (Photo: REUTERS/Arnd Wiegmann)

The Swiss Financial Market Supervisory Authority (FINMA) gave Seba and Sygnum the first licenses in provisional banking and securities licenses to officially let them offer regulated services like deposits, investing, lending and withdrawal using cryptocurrency to serve asset managers, regular banks, startups, and other financial institutions.

Though the licenses got granted in August, neither of the banks has been given permission to publish its prospectus just yet.

The most important role of Seba and Sygnum would be helping crypto entrepreneurs and crypto traders who are oftentimes denied bank accounts because of the perceived risky reputation of crypto companies.

Praising this move is Stefan Deiss, founder, and CEO of the Swiss crypto accelerator, Blockchain Propulsion, saying that "It's a great move for Switzerland" having "banks that are specialized in crypto."

Blockchain Propulsion helps startups raise capital.

Both Seba and Sygnum will get fully licensed in a month.

The moment this happens, they can issue, manage, store and trade cryptocurrencies like Bitcoin and Ether and convert fiat currencies to crypto.

Going hi-tech all the way, the two banks can also do brokerage, custody and tokenization services for digital assets.

This license granting had warmed up other companies like veteran crypto financial services provider Bitcoin Swiss.

Switzerland has been one of the leading players in digital ledger technology (DLT) and the adoption of tokenized digital assets.

The banking hubs of Europe are also preparing to have Libra, the digital currency proposed by Facebook.

Though Germany, Liechtenstein, and Luxembourg are all taking steps towards DLT, none of them has yet given a license to a bank dedicated to cryptocurrency.

Even the small nation of Malta, the "blockchain island," has been busy introducing legislation that favors crypto companies.

However, Malta's startups are finding it hard to avail of banking services. 

Because of this, Malta-registered RnF Finance applied to the Maltese financial regulator for a license at the end of last year.

Ian Gauci, co-founder of Malta's Caledo agency which provides legal, and technical services for crypto clients to help them obtain a license said that licenses will not be given out easily" it being "a very robust process."

Looks like Switzerland, the current world leader in offshore private banking with an estimated worth of $8.5 trillion, will still head and make headlines when it comes to taking care of cryptocurrency because Malta is a member of the European Union wherein member nations follow common rules regarding the movement of goods and services.

There are signs that the EU is getting stricter with cryptocurrencies.

Germany, a member of EU, even implements the application for licenses from the financial regulator limiting services that were then easily available to the crypto community.

Diess added that banks are more likely to partner with licensed crypto banks rather than make the transition.

Case in point is the private Swiss investment bank Julius Berne that recently partnered with Seba.