By David Drake
Falcon Private Bank, a Switzerland-based bank, has announced that it now has a system that supports the direct transfer and storage of selected cryptocurrencies. The bank has introduced digital wallets called ‘Falcon Wallets’ that allow institutional and private customers to transfer cryptocurrencies as well as convert them to fiat.
The digital coins that are currently supported by the bank are Bitcoin, Bitcoin Cash, Litecoin, and Ethereum. In doing so, Falcon Bank has made these digital assets ‘fully bankable’ according to the report published on January 21. It has officially recognized them as virtual assets and even plans to include them in tax documents and portfolio statements.
According to Martin Keller, CEO of the Falcon Private Bank, noted that by merging innovative financial solutions with conventional banking services, the bank has once again demonstrated its expertise and positioned itself as a leader in the virtual assets space.
For a long time, skepticism has clouded cryptocurrency security. To address this, Falcon bank, in its ‘proprietary custody solution’ promises that these digital assets will be secure. This promise is backed by third-party providers that have examined and audited Falcon’s premier custodial service. Not only is the service secure, but it is fully compliant with regulations governing Know Your Money (KYM) and Anti-Money Laundering (AML) laws.
Falcon was the first bank to be authorized by the Swiss Financial Supervisory Authority (FINMA) in July 2017 to manage and operationalize blockchain-based assets. FINMA has since published guidelines that enable other custody services to apply to its fintech licenses starting this year.
As European nations pioneer and flock towards greater acceptance of blockchain-based assets, the western world perches on the regulatory seat for guidance. The fact that digital assets can be bankable is a big deal for many financial institutions that have been struggling to find ways to integrate cryptocurrencies into formal banking procedures.
According to Kenji Claudio, Blockchain Executive at Momentum Studios, more banks are likely to gradually integrate cryptocurrencies in their services.
He says, “With such banking institutions treating cryptocurrencies like assets, we will, over time see a gradual trend grow towards bigger players in the banking world as banks start taking a share of that market. We will begin to see cryptocurrencies being used as collateral instruments for common banking products in lieu of letters of credit and bonds, which is a move in the right direction.”
Agreeing that progress towards making digital assets bankable will be gradual, William Davis, Managing Director at LDJ Capital says, “There will be a wait and see and deeper dive before momentum builds. The wait and see will manifest itself in the review of the bank’s balance sheet over the next few quarters. The deeper dive into asset quality, hedging and tax strategies will be needed before the herd follows. Supply Chain and Logistics are the low hanging fruit for blockchain adoption. The inefficiencies in legacy systems inspire new methods, approaches and platforms to reduce the mistakes and redundancy baked into existing operations. Transparency alone will help blockchains gain traction.”
On the heels of the announcement made by Falcon, Belarusbank, the largest largest bank in Belarus, is set to launch a cryptocurrency exchange platform. The bank is seeking to intensify digitization with plans to issue digital cards soon, as well as expand its services by aligning with mobile providers.
For Viktor Ananich, chairman of the board at Belarusbank, digital projects will be exclusive in nature. He notes that at the moments, things are dynamic and the bank needs to keep up with the pace.
While the rest of the world may hold a similar view, no country can realistically get to the heights of what blockchain offers the finance sector without central bank backing and streamlined regulations. The government of Belarus already legalized crypto-related activities last year, paving way for Belarusbank to legitimize digital assets. Japan made a similar move in 2018 with SBI Group, financial services mogul.
With Vontobel’s Digital Asset Vault, also based in Switzerland, other banks will be able to store digital assets without customers worrying over individual encrypted keys. More banks are likely to come onboard to offer the same similar services now provided by Falcon Private Bank. The wave is rolling to shore, and as time goes, more banks across the globe are expected to follow suit.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.