Until recently, cryptoassets were still considered a closed book for many Swiss financial institutions. But cryptoassets have the potential to completely revolutionize not only the financial world but other industries as well, and now extend far beyond cryptocurrencies such as Bitcoin and Ethereum. Meanwhile, financial service providers face the challenge of adapting to their customers’ changing needs.

PostFinance actively monitors market trends and believes that blockchain technology is a relevant driver for new innovations. As already stated in the PostFinance The link will open in a new window Annual Report, this addresses customers’ need for a trustworthy provider of cryptoasset trading and custody.

Why banks are backing the trend

From the banks’ perspective, including that of PostFinance, several decisive factors speak in favour of introducing a cryptocurrency service.

Changing customer requirements

As recent findings show, strong customer demand for cryptocurrencies is the key driver. Younger customers in particular want to invest their money in such assets and would like to have access to this market. Buying and selling Bitcoin and other cryptocurrencies is a skill that needs to be acquired. Because many private investors shy away from the risks associated with cryptocurrencies, demand is growing for transactions via an established and trustworthy financial institution.

That’s nothing unusual for PostFinance: “Cryptoassets have become an integral part of the financial world, and our customers want access to this market at PostFinance,” explains Philipp Merkt, Chief Investment Officer. PostFinance is set to offer crypto trading and custody of digital currencies from spring 2024. The plan is to continuously expand regulated crypto products and services.

Innovation

The blockchain technology on which cryptoassets are based is future-oriented. Banks such as PostFinance are jumping on the cryptocurrency bandwagon at an early stage by offering crypto trading and related products, ensuring they are at the vanguard of developments relating to blockchain. A glance at the latest EY Banking Barometer   EY Banking Barometer 2023: the study surveyed 100 banks in Switzerland, including 27 percent private banks, 28 percent non-Swiss banks, 25 percent regional banks and 20 percent cantonal banks. confirms that cryptocurrencies are becoming more and more appealing for many financial institutions. Whether private banks, regional banks or cantonal banks, one thing is clear: despite the unstable prices of Bitcoin and other cryptocurrencies, and despite the regulatory challenges, the majority of the banks surveyed are planning to introduce a business model for cryptocurrencies and are seeking to tap into the associated potential. According to the results of the November 2022 EY survey, around 52 percent of the financial institutions surveyed plan to launch services for investments in cryptoassets within the next three years.

Regulation and compliance

As far as regulation in cryptoassets is concerned, Switzerland is assuming a pioneering role. In many countries, the crypto market is not yet fully regulated. By integrating cryptoassets such as Bitcoin or crypto exchange traded products (ETPs) into their range of services, banks can help monitor activity in this field and ensure that it complies with the applicable regulations and guidelines. In Switzerland, banks are governed by the regulations issued by the Swiss Financial Market Supervisory Authority (FINMA), which means they have experience in regulatory compliance. They can rely on their expertise to make crypto trading more secure and trustworthy.

Three benefits of crypto trading via a bank

It is easy to understand why banks are following the cryptocurrency trend. But what does it mean in concrete terms for private investors if their main bank now acts as a platform for cryptocurrency trading and custody? From an investor’s perspective, it can also make sense to trade in cryptocurrencies and keep them in custody with a bank:

Account, crypto exchange and wallet all in one

Cryptocurrencies traded at a bank offer two major advantages:

• Secure custody: cryptocurrencies and other cryptoassets can be kept in the same place as traditional investments and, above all, securely. There is also the option of including cryptocurrencies in traditional investment portfolios. This provides a uniform overview of a portfolio comprising traditional assets and cryptoassets.
• Easy to buy: cryptocurrencies are as easy to buy or sell as other assets. No money needs to be transferred to a crypto exchange beforehand in order to buy cryptocurrencies. This not only saves time and effort, but also the high fees that normally apply to such transfers.

Taxes

As cryptocurrencies and other cryptoassets are held at banks in the customer’s name, they are visible in their asset statements, and this greatly simplifies reporting to the tax authorities. The assets are held off-balance sheet and are not transferred to the bankruptcy estate if the bank becomes insolvent. This greatly reduces the risk for investors and is often not the case with non-Swiss crypto exchanges.

Security and trust

Self-custody of cryptoassets requires a lot of knowledge, and personal responsibility also increases. Investors who hold their cryptoassets independently are their own bank. All protection and security measures that are normally assumed by the financial service provider must be taken and complied with by the customer themselves. Acquiring knowledge, finding the best crypto exchanges and experience can reduce the risks of self-custody, but no one wants to pay the price of learning how to recognize and avoid the risks of self-custody.

It can therefore be useful to call on expert knowledge for such activities. When crypto transactions are carried out via a bank such as PostFinance, the experts ensure that trading is efficient and custody is secure. This can be especially helpful for fledgling investors who don’t have much experience with cryptocurrencies. Furthermore, banks are well-established and regulated institutions that have strong security measures in place. Cryptoassets held at banks are usually well protected and less vulnerable to hacking or theft.

Whether you carry out your crypto transactions via a bank, crypto broker, crypto exchange or peer-to-peer depends largely on your individual needs. It is advisable to find out all the information about the specific services, costs and security measures. It is also important to know which providers allow buying, selling and custody of cryptocurrencies. PostFinance will soon be one of them and will be pleased to assist you where required.

Do you want to handle your Bitcoin and other cryptocurrency transactions independently? If so, it is important to ensure that you are fully informed of the technical basics and possible risks of cryptocurrencies. You can read more about this in the article “What you should know before investing in cryptocurrencies”.