Technology
Julius Baer Steps Up Crypto Game

The Zurich-listed private bank is partnering with a firm aiming to bridge the gap between traditional finance and the evolving space of digital currencies.
Julius Baer is
collaborating with SEBA Crypto, a Swiss firm that straddles
traditional financial services and the expanding crypto-currency
space, which continues to generate interest in spite of high
volatily in such digital markets.
The Zurich-listed private bank already embarked on an early-stage
minority equity investment in the Zug-based firm last year.
The partnership will take shape when SEBA gets FINMA banking and
securities dealer licencing. The bank said it plans to extend its
service range to provide storage, transaction and investment
solutions for digital assets.
A number of banks are entering the crypto-currency space and the
associated blockchain distributed ledger technology field,
enthused by these areas' famed ability to transact more quickly
and efficiently. Bitcoin and other crypto-currencies remain
controversial, however, with some governments frowning on them as
potentially enabling money laundering and other abuses.
The wealth management industry can be sceptical or even hostile
to crypto-currencies – a recent conference in Interlaken,
Switzerland, which was attended by WealthBriefing, heard
concerns about the source of wealth behind crypto trades.
Advocates argue that blockchain, which enables transactions to go
ahead without the need to be validated by a third party, can
rapidly speed up data flow and slash costs. Back- and
middle-office functions could be revolutionised, for example.
Jurisdictions such as Switzerland and Liechtenstein are striving
to gain a lead as hubs for such organisations. The US, the UK,
Singapore, Estonia, Canada and Australia are also prominent
jurisdictions.
An issue has been high volatility. An entrant into the field,
BitSpread, has developed investment banking-type tools to help
clients hedge exposures. Vontobel and Falcon Private Bank, two
other Swiss firms, have also entered the crypto-currency and
blockchain space.
Julius Baer is optimistic that digital assets are a growth
market.
“At Julius Baer, we are convinced that digital assets will become
a legitimate sustainable asset class of an investor’s portfolio.
The investment into SEBA as well as our strong partnership are
proof of Julius Baer’s engagement in the area of digital assets
and our dedication to make pioneering innovation available to the
benefit of our clients," Peter Gerlach, markets head at Julius
Baer and proposed member to SEBA's board of directors, said.
Lionel Fournier, chief executive of BitSpread Financial
Solutions, recently told this publication that the
crypto-currency and associated markets are maturing, with more
significant players entering the field.
"As we enter into a much more mature phase of the market, we are
witnessing an increasing professionalisation of markets for
crypto-assets, which is, in turn, drawing in large incumbent
firms and the institutional capital which they command," he
said.
"To name but a few examples of this institutionalisation of
crypto markets, JPMorgan just launched their own coin. Fidelity
Investments (one of the five largest financial service providers
in the world) has launched a crypto-currency trading and storage
platform, geared towards enterprise clients. Elsewhere,
Intercontinental Exchange (the parent company of the New York
Stock Exchange) is preparing to launch its own platform, which
aims to offer all manner of crypto-currency related services, in
addition to trading and warehousing," Fournier said.
Julius Baer's partnership announcement comes shortly after fellow
Swiss banking group Vontobel offered financial intermediaries
such as banks, asset and wealth managers a custody
solution for crypto-assets with the launch of its "Digital
Asset Vault" – a move it said which broke new ground. (The
Vontobel facility means that customers no longer need to buy and
store their crypto-currencies on individual crypto-platforms,
which can crash during volatile trading, or use a private
security key to access currency, which if lost or stolen leaves
users without a way back to the assets they have stored.) Falcon
Private Bank recently said that it accepts direct
transfers of selected crypto-currencies.