Swiss financial institutions have missed the boat regarding the surge in Bitcoin and other cryptocurrencies.
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It’s a situation full of paradoxes: the invention of bitcoin was a reaction to the global financial crisis of 2007/2008, in which the questionable actions of banks played a preponderant role. And now, are we taking the liberty of accusing banks of missing out on the craze for cryptocurrencies?
But it’s not that simple.
A lot has happened in the last fifteen years. Blackrock, the world’s largest asset manager, has launched exchange traded funds (ETFs) on Bitcoin and Ethereum. Many other renowned actors followed suit. Blackrock’s Bitcoin ETF is now breaking record after record.
Other signs indicate that Bitcoin and other cryptocurrencies are widely accepted: according to a recently published study by the University of Lucerne (commissioned by Postfinance), one in eight Swiss people invests in cryptocurrencies (11%). That still represents a million people. Among people whose income is more than 150,000 francs per year, this percentage is significantly higher: almost one in four (22%) have already invested in cryptocurrencies. The proportion is also above average among young people.
Lucerne Cantonal Bank offers its customers the opportunity to purchase cryptocurrencies. Image: KEYSTONE
With a million investors, that’s a lot of money – and given that it’s mostly young people who are interested, the future generation of customers has the potential to be defined by cryptocurrencies. Logical conclusion: Swiss banks should flood their customers with cryptocurrency offers. However, this is far from being the case. Most of our country’s financial institutions are lagging behind. This is shown by the responses of the 17 banks and wealth managers we contacted.
“Crypto is not an asset class on our recommendation list,” writes, for example, Geneva-based wealth manager Pictet, who manages more than $600 billion.
“We refer interested customers to competent external partners”
Pictet
Still, there are ETFs – as is now the case everywhere.
Even Switzerland’s largest bank, UBS, has always been cautious about Bitcoin. The bank did not respond to our request. Due to its volatility, bitcoin is not suitable as a strategic portfolio investment, Mark Haefele, Chief Investment Officer of UBS, told the trade journal a few days ago. Cash.
“We are skeptical that cryptocurrencies will significantly penetrate the real economy”
Mark Haefele
Raiffeisen Bank agrees: customer interest increased due to media hype. The cooperative, however, continues to offer Bitcoin and Co. to its customers only indirectly, through ETFs. Asked how Bitcoin and Ethereum would score as investments on a scale of zero (extremely unsafe) to ten (extremely safe), the giants of the cryptocurrency market are punished: Bitcoin gets a three, Ethereum one two.
Migros Bank customers cannot purchase Bitcoins either (except via ETFs). The bank does, however, have an advisory offering which allows cryptocurrencies to be discussed as part of a diversified portfolio.
Some cantonal banks as well as Postfinance are more open. At the cantonal banks of Zurich, Zug, Lucerne, St. Gallen and Thurgau, customers can purchase Bitcoin and Ethereum directly. The same goes for Postfinance. The establishments are responsible for managing access keys. Sending or receiving coins currently only works at the Lucerne Cantonal Bank, at Swissquote and, according to research by House of Satoshi, at VZ Vermögenszentrum.
*The searches do not include French-speaking cantonal banks.
But why store Bitcoins and other cryptocurrencies in the bank?
Everyman, who bought five Bitcoins for 5,000 francs in 2017, stores nearly half a million dollars at home (these lines were written on 11/21/2024), provided that he has followed this infernal race until today. It may be that his private access keys are written on a piece of paper in a biscuit tin or that he uses a so-called cold wallet – fortunately, prices were not the only thing to increase, the possibilities for “secure” storage of private keys have also multiplied. The fact remains that not everyone can go on vacation without worry and leave the key to a fortune at home.
Added to this is the technical tinkering of crypto wallets, which deters older people in particular from taking a more serious interest in it.
For Swiss banks, there would therefore be enough room to maneuver to carve out a share of the Bitcoin pie. Currently, as the study by the University of Lucerne shows, Swiss buyers of cryptocurrencies still prefer to buy their coins abroad, notably from Revolut and Binance. Swissquote is the only national provider to appear in the top three.
Translated and adapted from German by Léa Krejci
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* How might the Swiss government balance fostering innovation in the cryptocurrency sector with protecting investors and ensuring financial stability?
## Open-Ended Discussion Questions Based on the Article:
This article discusses the growing adoption of Bitcoin and other cryptocurrencies in Switzerland, particularly highlighting the hesitant approach by Swiss banks compared to the interest shown by the Swiss population.
Here are some open-ended questions fostering discussion and diverse viewpoints:
**I. Cryptocurrency Adoption in Switzerland:**
* The article mentions that one in eight Swiss people invests in cryptocurrencies. What factors could be driving this adoption rate in Switzerland specifically?
* How do you think the demographics of cryptocurrency investors in Switzerland (e.g., age, income) might shape the future of the cryptocurrency market in the country?
* The article mentions that young people are driving cryptocurrency adoption. What are the potential implications of this trend for the future of finance and traditional banking?
**II. Swiss Banks and Cryptocurrency:**
* What are the potential reasons behind Swiss banks’ cautious approach to offering cryptocurrency services, despite the growing interest from their customers?
* Should Swiss banks be more proactive in offering cryptocurrency-related services? What are the potential benefits and risks involved for both the banks and their customers?
* Some banks argue that Bitcoin is too volatile to be a strategic investment. Do you agree? What factors contribute to Bitcoin’s volatility, and how could this be mitigated?
**III. The Future of Cryptocurrency in Switzerland:**
* What steps could be taken to encourage wider adoption and acceptance of cryptocurrency in Switzerland?
* How might the regulatory landscape for cryptocurrencies in Switzerland evolve in the coming years? What are the potential implications of this evolution for both investors and businesses?
* What role do you see for traditional financial institutions in the future of cryptocurrencies?
**IV. Beyond Bitcoin:**
* The article focuses primarily on Bitcoin and Ethereum. What other cryptocurrencies are gaining traction in Switzerland or globally, and what are their potential applications beyond investment?
* What are the ethical considerations surrounding the growing popularity of cryptocurrencies, such as energy consumption and potential for financial crime?
* As the technology behind cryptocurrencies evolves, what are some of the potential innovations and disruptions we might see in the future?
**Thematic Sections for a Discussion:**
These open-ended questions can be organized into distinct thematic sections to guide a more structured discussion:
1. **The Rise of Cryptocurrency in Switzerland:** This section would focus on the factors driving adoption, demographic trends, and the implications for the future of finance.
2. **Banks Hesitation and the Case for Caution:** This section would explore the reasons behind banks’ reluctance, the argument for a more conservative approach, and the potential risks and benefits for both banks and customers.
3. **Shaping the Future of Crypto in Switzerland:** This section could delve into the potential for increased regulation, the role of traditional institutions, and the prospects for wider adoption and acceptance.
4. **Beyond Bitcoin: Exploring the Bigger Picture:** This section could broaden the discussion to encompass other cryptocurrencies, ethical considerations, and the potential future of blockchain technology.
By framing the discussion around these key themes, you can encourage a deeper exploration of the complex and evolving world of cryptocurrency in Switzerland.
