Former UBS bankers to set up regulated crypto-bank
SEBA aims to have banking licence in Switzerland by mid-2019
A pair of former UBS bankers has raised £80m to set up a regulated “crypto investment bank” in Switzerland.
SEBA Crypto AG is one of a number of start-ups hoping to become the region’s first regulated cryptocurrency bank.
It said it plans to apply for a traditional banking and securities dealer licence from Finma, the Swiss financial regulator, and that it hopes to have one by the middle of next year.
The Swiss regulator has been in talks with SEBA, according to one person familiar with the situation, but the agency has not yet received a formal application. If granted, regulation would be similar to other securities dealers, the person said.
SEBA said it will have the same type of onboarding process for clients as traditional banks in order to comply with “know your customer” rules.
It added that it was assessing new technologies that help track digital assets that have been identified as previously stolen or linked to criminal activities, known as “tainted” funds, as a way of meeting anti-money laundering requirements.
Guido Buehler, the chief executive, was formerly the head of asset servicing at UBS Wealth Management.
He will be joined by chairman Andreas Amschwand, a former global head of foreign exchange and money markets at UBS who currently sits on the board at Julius Baer Wealth Management.
Mr Buehler said SEBA will offer similar types of broking and wealth management services as banks offer customers with traditional fiat currencies. “We will provide the ‘last mile’ — the bridge between the crypto and fiat world,” Mr Buehler said.
The services include custody, trading and investment management for crypto assets for both private investors and institutions. It will also operate accounts for cryptocurrency companies and offer them corporate finance advice, he said.
Its emergence comes as the cryptocurrency industry begins to build some of the safeguards seen in the global financial system.
Currently, many cryptocurrency exchanges store and trade assets, making them a prime target for hackers. It also opens them up to potential conflicts of interest, a report this month from the New York attorney-general found.
Swiss politicians want to ease the cryptocurrency industry’s access to banking to steal a lead in the emerging financial products. Last year, Switzerland ranked second after the US in funds generated from “initial coin offerings” — when start-ups sell tokens or coins — to investors.
But most traditional banks in the region have refused to operate accounts for crypto start-ups, citing concerns over anti-money laundering rules and other rules on managing clients. As a result, some companies have begun to bank with lesser-known lenders in countries such as Liechtenstein, Gibraltar and Poland.
“Banks today could open normal accounts for blockchain and crypto-related companies but the appetite is very limited,” Mr Buehler said. “It’s a very critical missing element of the current ecosystem. [But] we will be able to offer bank accounts in fiat and crypto.”
In July, Heinz Tännler, finance director of Zug canton, said he expected Swiss politicians and regulators to remove obstacles by the end of the year, allowing crypto firms to operate with banks in the same way as other companies. Zug, dubbed “Crypto Valley”, is home to about 200 blockchain-based companies.
Cryptocurrency prices, which rocketed towards the end of last year, have since sunk to 10-month lows in a major sell-off that is putting a strain on the industry.
Mr Buehler said the fundraising — done without an investment bank or any advisers — was “a manifestation of people that believe in it”.
Investors include Guy Schwarzenbach, chief executive officer at BlackRiver Asset Management AG, and Jack Chung, managing director of Summer Capital, an Asian investment management company.
Source: Financial Times
Hannah Murphy and Philip Stafford in London