Second Swiss Private Bank Opens Doors to Cryptocurrency Deposits

Maerki Baumann, a Zurich-based private bank, has announced that it will manage the cryptocurrency assets of clients. It is the second Swiss private bank to do so.

"Generally prepared to accept funds generated through Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term"

The bank has published an article on its website entitled "Cryptocurrencies - What exactly are they?" It was written by Milko G. Hensel, Deputy Head of IT and Digitisation.

In the article, Hansel explains the basics of what cryptocurrency is and goes over a few of the most popular coins. He concludes by advising clients against any major investment in the asset class.

According to the editorial, the institution is "generally prepared to accept funds generated through cryptocurrencies," whether raised through speculation, mining or as payment for services rendered.

However, Hansel clarifies that as an institution it has no present plans to invest. This is because it "currently only has limited empirical data and information to call upon (prices, Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term, trading volumes)."

Hansel added: “Generally speaking, however, we would advise against any major investment in cryptocurrencies at present. In our view, cryptocurrencies are unsuitable for long-term investors due to the uncertainties set out above.”

Maerki Baumann, est. 1932, is a family-owned bank that primarily offers investment advice and asset management for institutional clients. It manages 646.3 million CHF ($649,037,080) in client assets, according to its 2017 financial report.

Interestingly, it is advising its customers to consult with Bitcoin Suisse, which is a cryptocurrency consultancy firm.

Bitcoin ATM in the lobby

Bitcoin Suisse is a business partner of Falcon Private Bank, which was the first private bank to accept cryptocurrency. It announced in August 2017 that it was prepared for Ethereum, Litecoin and Bitcoin Cash, and it even set up a Bitcoin ATM in the lobby of its headquarters.

Falcon Bank handles 4.6 billion CHF in client assets and has locations in Abu Dhabi, Dubai, London, and Luxembourg.

That same month, Falcon poached the CIO of Maerki Baumann, hiring him as chief strategist. Maerki Baumann CEO Stephan Zwahlen said at the time: "We take this opportunity to discuss the future positioning of our investment area. Based on that we will decide on an appropriate replacement."

Client demand

Private banks cater to high net worth individuals. Maerki Baumann is clearly not enthusiastic about offering this new service, so must be doing it due to client demand.

This can be seen as a continuation of the trend of big money people and institutions adopting cryptocurrency as part of their portfolios. Switzerland, in particular, is a good country to observe this.

For example, the owner of the country's main stock exchange announced in July that it is building a cryptocurrency trading desk. The Swiss Digital Exchange is planned for launch next year and will operate under the supervision of the national financial regulator.