The price of bitcoin has been in freefall in recent weeks, but that doesn’t seem to bother the most conservative of financial institutions – the banking arm of the Swiss post office. PostFinance is stepping up its drive to grant customers access to cryptocurrencies within the next couple of years.
Postfinance already offers clients cryptocurrency exposure through its digital app Yuh. This service draws heavily on a collaboration with Swissquote, which became the first Swiss bank to offer crypto trading for retail clients in 2017. But PostFinance now appears poised to go into direct competition with its business partner with an “independent” trading and custody service by the start of 2024 “at the latest”.
PostFinance’s executive board have determined that the time is ripe for ramping up the bank’s cryptocurrency offering despite the apparent onset of another period of price stagnation – known as a ‘crypto winter’. “Our clients want direct access to this market through their house bank,” says PostFinance head of retail banking Sandra Lienhart. “Given the growing institutionalisation [of cryptocurrencies] in the last 18 months, this is the ideal time to enter the market.”
Cryptocurrencies, by their very nature, are accessible to anyone at any time. No-one needs a bank to get their hands on bitcoin or to trade ether. Service providers like the Relai app and the Bity brokerage give the person on the street the means to hold or trade cryptocurrencies independently of the traditional financial system.
But some people are prepared to sacrifice direct ownership of their cryptocurrencies for the security of bank vaults and simplified versions of transacting.
I’ve written extensively about Swiss private banks opening crypto services for their wealthy clients. Two entities, SEBA and signum that specialise in this asset class, were awarded banking licenses in 2019. But high street banks have so far been reluctant to enter the fray.
Swissquote has shown that the mass crypto business can be profitable. Revenues from cryptocurrency trading services reached CHF102 million last year and are making up an ever-larger slice of profits at the bank.
There are always some people who argue that crypto and banking should keep each other at arm’s length – either because crypto is too dangerous for banks or that banks are too antiquated for crypto.
But others believe that acceptance of cryptocurrencies by banks is the best way to achieve mass adoption of the new form of digital money.
PostFinance is betting on the latter argument prevailing and is actively seeking business partners to realise this ambition.
If the Swiss post office can issue a crypto postage stamp, then why can’t its bank offer crypto vaults?