Swiss banks queuing up to jump on blockchain train

Digital bank Swissquote is expanding its crypto business by delving into the new world of blockchain-compliant digital assets. It appears that they are not alone: several high street banks also plan to launch “tokenization” services.

Swissquote is teaming up with digital assets service provider Taurus to allow clients to issue and invest in tokenized assets. Blockchain – or other distributed ledger technology systems – promises to simplify the process of creating a wide range of assets, from company shares to fine wines and traditional securities, and to speed up transactions.  

“Many cantonal banks, retail banks and large systemic banks will be entering this space in the near future,” Taurus co-founder Lamine Brahimi tells me. “We see increasing interest”. He cites Switzerland’s recent introduction of new legislation that welcomes blockchain finance into the legal code.

It is no secret that the established banking scene is looking at ways of jumping into the digital assets space. Bern’s Cantonal Bank (BEKB) plans to releasing its own tokenization platform by the end of June while UBS has advertised for the position of Head of Blockchain Tokenization Consulting.

Until now, only the so-called “crypto banks” SEBA and Sygnum, plus blockchain specialists like Mt Pelerin, Taurus, Wecan Tokenize and TokenTrust, have been the early movers. Swiss stock exchange operator SIX Group hopes to launch a digital assets trading platform in the coming months.

While most high street banks still turn their noses up at cryptocurrencies, such as bitcoin, they appear to be increasingly convinced that blockchain, can save time and money in the securities trading business.

Swissquote now has a foot in both camps. It already allows clients to trade in cryptocurrencies. By the end of February, it held CHF1.8 billion worth of clients’ cryptocurrencies in custody – up from CHF1 billion at the end of 2020. The bank forecasts revenues from this business line to double this year to CHF32 million.

“With Taurus’ products, we can offer our customers an expanded range of investment opportunities in the field of digital assets,” stated deputy CEO Paolo Buzzi on Tuesday.

It has an agreement to use three Taurus products to create tokenized securities, securely store them, interact with Ethereum smart contracts (which set the automated terms and conditions of the assets) and connect with other blockchain networks. “We allow clients to handle any type of corporate action around digital assets,” says Brahimi.