Swiss bank to offer accounts to cryptocurrency firms

Maerki Baumann, a Swiss bank, will partner with cryptocurrency firms to offer accounts to them. To that end, the bank said it is ready to accept funds generated through cryptocurrencies whether it is generated through speculative transactions or through payment for services or from mining profits. Otherwise, most banks refuse to accept such money mostly on grounds of their background claiming it is tainted or hard to verify with money laundering regulation.

The bank will join Falcon Private Bank, which in addition to offering banking services to cryptocurrency companies, has also begun offering cryptocurrency asset management services in collaboration with Bitcoin Suisse AG. However, Baumann will not offer cryptocurrency asset management or custody services but said it is keeping an eye on the asset class and the corresponding progress on the regulatory side. This would affect their approach on both direct investments in cryptocurrencies as well as investments in the necessary technology for trading and custody services.

Hypothekarbank Lenzburg bank became the first bank in the country to provide business accounts to blockchain and crypto companies earlier in June. The bank said it arrived at the decision after "very precisely" weighing on relevant risk and compliance issues as relates to money laundering problem. The company is very selective in accepting new customers and performs rigorous due diligence process before doing so.

Another bank, Bank Frick of Lichtenstein, already as early as February introduced direct crypto investment and cold storage services for Bitcoin, Bitcoin Cash, Litecoin, Ripple and Ethereum. The bank said it saw no compliance issues or risks to the reputation in doing business with Swiss crypto companies.

Even as most Switzerland banks stayed away from offering such services, a lot of business and capital is flowing to neighboring Lichtenstein. The government of Liechtenstein introduced blockchain regulations with the introduction of a related bill in the summer of 2018. The regulation is set to provide legal certainty for businesses and customers alike. Prime Minister Adrian Hasler said that blockchain would in future host trading of large shares of economic processes and financial services.

Also, although considered a Crypto Valley given its favorable cryptocurrency regulations, Switzerland has been experiencing an exodus of crypto firms especially with a number of departures that followed the closure of two small banks that served businesses with assets associated with cryptocurrency-related activities. After the closure of the two, industry businesses started struggling to find banking partnerships. The same problem has affected crypto companies in many other regions around the world.

The Swiss National Bank (SNB) warned that some ICOs could be violating money-laundering laws due to failure to carry out anti-money laundering checks on their investors. Thus banks that do business with non-compliant ICOs many of which held token offerings before the current legislation risked legal consequences.

Malta’s “Blockchain Island was the largest beneficiary following this exit although some moved to Liechtenstein and the British Virgin Islands and other regions considered to have favorable regulations or policies on cryptocurrencies.

Hence provision of banking services by Baumann and its readiness to partner with cryptocurrency firms may provide another wave of hope for the region to attract more firms once again.

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