(Rejected) Banks Are Increasingly Gaining Interest in Cryptocurrencies, Says Former Banking Executive
We’ve come a long way since Jamie Dimon, JPMorgan Chase CEO, called bitcoin a fraud in 2017.
Digital currencies are slowing becoming a norm of how financial services will be rendered – and banks are coming on board. Banking institutions are examining the roles they can play in crypto markets, as interest in cryptocurrencies is gaining equal footage with fiat currencies.
These are not my words but are realities seen in the current financial market.
Blockchain.News followed up an interview exercise conducted by finews.com in which Peter Wuffli - the former Chief Executive Officer of Swiss UBS - was interviewed about his professional experience on cryptocurrency.
Curiosity Drive
Curiosity influenced Wuffli to take up a new challenge in the field of crypto-assets. He is the former CEO of the largest bank in Switzerland – Swiss UBS and now has taken up a role as a director at Sygnum, a newly established Swiss crypto bank.
The financial regulator awarded a banking license to Sygnum. The aim of this crypto bank is to catch the sudden increase of the interest in cryptocurrencies and digital assets, traded and created by blockchain technology systems.
Wuffli is aware that such kind of financial innovation can create unexpected situations like a hefty price tag – seen by the bursting of the mortgage-backed securities bubble which almost ruined UBS. However, this time, he believes that innovation could make the markets to become more efficient.
The Craze for Crypto-asset Markets
The interest in cryptocurrencies is not something that can be hidden. Now, many banks are placing their bets and beginning to take cryptocurrencies seriously. They are looking forward to having a stake in its growth.
Digital currencies, ledger technology, and the blockchain are going to be a big part of banks. Such a wave of enthusiasm among banks shows how the financial industry is developing and access to blockchain technology being developed.
Since the license was granted to Sygnum, traditional banks like USB, Credit Suisse, and others picked up the interest.
Wuffli says that bank executives were asking their middle management to find out whether cryptocurrency is just another fintech fad which comes and go, or whether it’s really transformational.
Wuffli mentions that traditional banks are strategically wondering whether they should commit to this technology, and what it would imply in terms of changes to mindset and systems.
Implications to Banking Institutions
Wuffli believes that banks in Switzerland are well-positioned as the global market with wealthy people would not disappear. Wealthy individuals are increasingly looking for exposure to cryptocurrency. They are not prepared to miss out on this enormous market opportunity and are rebalancing their investment portfolios toward such digital assets.
The Sygnum director says that the smaller banks see cryptocurrencies as an opportunity for them to build a new field and develop a sense of innovation. He admits that in Switzerland, in particular, and the financial sector, in general, is short on growth opportunities, so they are looking for new products.
When asked what potential bubbles he sees forming in the crypto field, the Sygnum director said that he doesn’t see a bubble right now. But he sees more serious business solutions and planning taking place to address client needs after financial institutions learned from the previous bitcoin bubble and initial coin offering.
These are clear indications that banks are going to integrate blockchain technology into their current infrastructure. But while they may not be endorsing cryptocurrencies publicly, they are working behind the scenes to adapt where they will play a greater role in financial services.
The increasing interest in cryptocurrencies among financial players shows that the crypto-asset markets are going to be an incredible long-term investment.