The air is abuzz with talk about bitcoin, smart contracts, non-fungible tokens, tokenization and decentralised finance. And wealth management as an industry, and as a guardian of client wealth, is being affected by all of these areas in a variety of ways.

Credit Suisse is going after the digital assets business segment, inking a strategic partnership with Taurus, a digital assets infrastructure provider for financial firms, which concentrates on tokenized securities. 

The bank is lead investor in the Series B funding round of Taurus, a business that is regulated by Swiss financial regulator FINMA.

This partnership will deepen an already existing collaboration, focusing on jointly developing use cases, as well as applying distributed ledger technology and smart contracts.

Tokens, in this context, are a type of cryptocurrency that represents an asset, such as a private equity investment, or publicly listed stock in a company. Tokens can be used for investment purposes, to store value, or to make purchases. They are part of a wider trend of wealth managers' interests in digital assets, both as ways to make investments, and as potential investment ideas in themselves. (See here for an analysis of the current market.)

"The strategic partnership with Taurus is a cornerstone of the Swiss Bank division's digital assets strategy with the ambition to become the leading Swiss bank in that space. We continue to embrace new and innovative technologies, and expect to soon launch several digital asset services for clients on both the issuing and the investment side,” André Helfenstein, CEO Credit Suisse (Switzerland) Ltd, said.

Tokenization is often spoken about in the alternative assets space as a way of widening access to investors who aren’t ultra-wealthy or large institutions. Tokenization is an important trend and comes in two main forms – tokenization of established assets such as private equity or venture capital, and for non-bankable assets such as fine art.

For all its recent financial woes, the move is an example of how Credit Suisse wants to push ahead in hot areas such as digital assets. Switzerland is already home, in the canton of Zug, to the much-referenced “crypto valley” of specialist firms in this space. Among the specialist players in the field is SEBA Bank, which was founded in 2018 in Zug. It won a Swiss banking and securities dealer licence the following year, and secured a CISA licence in 2021. (SEBA was awarded "Digital Assets Offering or Service" at the Second Annual WealthBriefing Swiss EAM Awards 2022.)

In December last year Credit Suisse’s main local rival, UBS, closed what it says is the first tokenized debt transaction for Asia-Pacific investors. UBS’s London branch issued $50 million in digital fixed-rate security tokens that use blockchain technology to a series of high net worth, global family and institutional wealth investors across Hong Kong and Singapore.

This news service spoke last year to Saxo Bank co-founder Lars Christensen, who has a family office in St Gallen, about his work in the field of blockchain.

Ups and downs
The digital assets space, which covers a variety of entities, has been through a tough period. Late last year, Bahamas-registered FTX, the crypto exchange, filed for bankruptcy and its former CEO, Sam Bankman-Fried, was arrested and faces potential charges. In 2022 certain “stablecoins” were wiped out – prompting calls for tougher global controls – and the price of bitcoin fell sharply earlier in that year. 

Blockchain, or digital ledger technology, is also developing as a way of transferring information more rapidly, and with supposedly more accountability and transparency, than existing systems. Banks have been interested in using it to overhaul the back-office "plumbing" of the financial system. It is also said to have uses in fields such as intellectual property and medical data, among others.