Ensuring Trust in the Crypto Landscape

Crypto Mondays Zürich co-founder Elvedin kicked-off the latest event by welcoming everyone and expressing his excitement about the gathering. He mentioned that it was a special day as it was Bitcoin Pizza Day and also the one-year anniversary of Crypto Mondays Zürich. He thanked the pizza sponsor, PizzaDAO, who provided pizzas and drinks for the event. He explained the historical meaning of the Bitcoin Pizza Day event of someone buying a pizza for 10,000 bitcoins in 2010 which would be the equivalent of 238 million Swiss francs at the time of the event in May 2023.

Digital Asset Custody

Elvedin introduced Antonio Sundas from BBVA Bank Switzerland and Alexander Thoma from Postfinance as representatives from non-crypto native banks who would be discussing Bitcoin. He thanked them for being present and invited them to give short presentations. Antonio talked about his role as the responsible for digital assets at BBVA Bank and their focus on digital asset custody. He emphasized their vision of creating adoption, making the borderless economy a reality, and simplifying access to digital assets in a safe and reliable manner. Antonio mentioned that BBVA Bank had been among the first to develop an internal digital assets custody solution in Switzerland and highlighted their commitment to education and learning. He also mentioned BBVA’s position as part of a larger group serving millions of customers worldwide.

Exploring Bitcoin

Alexander introduced himself and briefly shared his experience as a co-founder of Alethena, a Swiss fintech company specialising in blockchain applications and digitalisation. He mentioned being named the Head of Digital Assets at PostFinance since July of the previous year, which allowed him to hold presentations and represent the company in the digital assets field. He explained that Postfinance has a history with digital assets, including exploring Bitcoin in 2013 and conducting case studies and pilots. However, they had not yet entered the market or made significant progress until recent years.

Around 2020, particularly when the pandemic hit, Postfinance made a new push towards digital assets, developing ideas around payments, stablecoins, and cryptocurrency trading. Alexander emphasized the challenges they faced in convincing management and educating them about the potential of digital assets. He mentioned that they had to distinguish digital assets from piracy and address fear, doubt, and a lack of knowledge among decision-makers. Eventually, in July of the previous year, they decided to start with cryptocurrency trading and custody as their phase one, with a multi-year plan and multiple phases.

The Right Mindset

Alexander discussed the challenges they encountered, such as integrating a new system into their legacy IT infrastructure, considering the differences between traditional asset custody and digital asset custody, and addressing basic questions that arose during discussions. He emphasized the importance of having the right people with the right mindset and knowledge to drive the project forward. He also highlighted the significance of management having skin in the game and being fully bought into the idea, which facilitated progress.

Regarding opportunities, Alexander mentioned the business case of earning trading and custody fees. However, he also emphasized that the journey was an opportunity for the organization to learn and prepare for the future. He stressed the importance of being proactive and gaining hands-on experience with digital assets, as it would benefit them in the long run, especially when dealing with technologies like hybrid CBDCs or digital Swiss francs for cross-border transactions.

Offering Choice to Customers

Elvedin initiated the podium discussion to address the role of banks and specifically the panelists bank in the crypto universe. Antonio responded by mentioning two sides of things: using blockchain for internal purposes and empowering the custody solution. He mentioned that they have done pilots for transferring money, creating finance funds, and are working with exchanges and startups. He expressed the importance of not missing out on the opportunities in the crypto space and emphasized the need for security and technical knowledge in using these systems. He also discussed the challenges of self-custody and the potential future adoption of cryptocurrencies. Antonio mentioned that BBVA is involved in many blockchain projects and is working on a range of topics.

Elvedin then asked Alexander about the challenges and opportunities with customers in the transition towards crypto. Alexander expressed his belief in free choice and the importance of providing customers with the option to choose between self-custody and a custody service. He mentioned that many people buy cryptocurrencies as an investment and not for payment purposes. He argued that it makes sense to offer crypto investment services through traditional banks to provide a familiar and secure environment for customers. Alexander also talked about the need for transfer capabilities and the integration of crypto into everyday banking.

The conversation then shifted to the topic of exchanges. Elvedin asked if there is an opportunity to work with exchanges and learn from them. Alexander expressed his view that exchanges should focus on their core function of facilitating trades and not engage in other banking activities. He mentioned the need to separate the roles of exchanges and banks and criticized the larger exchanges that offer multiple financial services. Antonio highlighted the collaboration and innovation brought by exchanges but also emphasized the importance of understanding the security and regulatory aspects.

During the audience Q&A session, a question was raised about the role of banks in the context of Bitcoin’s decentralization and the historical lack of trust in banks. Antonio and Alexander both acknowledged the historical context and emphasized the importance of offering choice to customers. They mentioned that some customers prefer the services and support provided by banks and that crypto adoption should involve providing a range of options. They also discussed the potential of decentralized finance (DeFi) and tokenization of traditional assets in the future.

Clear Regulation and Transparency

One of the meetup attendees mentioned that Switzerland has clear regulatory guidelines, unlike the US, and asked about the impact of regulatory debates on the bank’s activities. Antonio acknowledged that the regulatory situation in Switzerland is an opportunity for the bank. While they were not directly interested in competition within the US, they closely followed the regulatory developments and felt it was unfortunate for many crypto companies. Antonio believed that the US was missing out on a big opportunity in the crypto space. They also discussed the importance of transactionality in Africa and the potential for blockchain technology to enable transactions through SMS on mobile phones.

The conversation then shifted to the topic of CBDCs (Central Bank Digital Currencies). Alexander mentioned that the Swiss National Bank is showing no interest in directly being involved with retail CBDCs. He mentioned the possibility of commercial banks stepping in to provide a digital Swiss franc that would function like digital cash, combining privacy and programmability. Antonio added that various forms of tokenized money would coexist in the future, and there would be a need for clear regulation and transparency in the crypto market.

In the final part of the conversation, they discussed the future of the crypto industry. Antonio predicted that a few reliable custody providers would exist, while many exchanges and banks would fail. He emphasized the importance of cooperation and collaboration in the industry. Alexander envisioned a future where clients had a choice to store and trade cryptocurrencies at their banks, providing a one-stop shop for financial transactions.

Conclusion

The discussion highlighted the importance of balanced regulation and collaboration in the crypto industry. Speakers emphasized the need for transparent and reliable custody providers while acknowledging that many exchanges and banks may face challenges in the future. Overall, the conversation emphasized the evolving nature of the industry and the potential for cryptocurrencies to offer a seamless and integrated financial experience for customers.

Credits

• Pictures by Nick Weisser
• This article was written using artificial 烙 and human intelligence