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Offering institutions a full digital asset service in a secure environment

Offering institutions a full digital asset service in a secure environment

With institutional clients increasingly interested in the opportunities that cryptocurrencies can offer, Swissquote has built a complete digital asset offering to match their requirements.

As a pioneer in the electronic FX space for more than two decades, and now in the digital asset arena, Swissquote aims to become the most reliable cryptocurrency partner to institutional clients in Switzerland and beyond. With $2 billion of digital assets under management, the bank has built a full-service digital asset offering that meets the expectations of a demanding clientele willing to invest in a promising asset class full of opportunities.

Building on the knowledge honed through many years in the electronic FX space, Swissquote began to offer cryptocurrency trading capabilities to its retail clients in 2017 and extended that to its institutional clients in 2020. The offering encompasses 24 cryptocurrencies for trading versus the US dollar as well as exchange-traded products and certificate notes, which allow clients to invest in a basket of cryptocurrencies in addition to the technology that stands behind them.

Maxime Mordelet, Swissquote Bank
Maxime Mordelet, Swissquote Bank

“The development of our crypto offering finds its origin in the early appetite we had for this asset class and the disruptive technology behind it,” says Maxime Mordelet, institutional FX liquidity manager at Swissquote. “We are among the most innovative banks in Europe and it is natural for Swissquote to invest in present and future markets.

“As a bank with a developer mindset, we understand well the technology behind digital assets. Swissquote uses multiple encryption technology to ensure the storage and transmission of assets remains secure and reliable.”

Financial institutions in Switzerland – and particularly private banks that serve high-net-worth individuals – have already shown an interest in Swissquote’s digital asset offering.

Drawing on the skills and experience it has acquired while providing cryptocurrency solutions to its retail client base, Swissquote has designed a digital asset offering that provides institutions with a full-suite solution that encompasses everything from custody to execution, settlement and clearing.

With the relationships it has built over more than two decades of activity in the e-FX space, Swissquote is able to offer robust liquidity from the major non-bank liquidity providers in the market, as well as from crypto exchanges and over-the-counter (OTC) players that can be relied on regardless of market volatility.

And, as Swissquote is one of the banks with the highest capital ratio in Switzerland and one of the few listed banks to offer a global cryptocurrency offering, institutional players can rest assured that they are trading with a solid counterparty.

To allay institutional clients’ concerns about the security of their digital assets, Swissquote has built a custody solution that is secure and competitive. Client funds are kept in cold wallets and are accessible via a rigorous three-step verification process that safeguards their digital assets from being breached.

The process of transferring assets between cold wallets and trading accounts – or hot wallets – is carried out by Swissquote to settle transactions behind the scenes so clients can trade as they please without having to initiate these transfers themselves.

It is important to note that all of the hardware security modules Swissquote uses are located in Switzerland and the bank owns the private keys.

“Our custody solution is entirely based in Switzerland, so security is not based on speed of access to funds. Moving assets out of cold storage involves careful co‑ordination across multiple parties,” explains Mordelet. “On top of competitive pricing, our clients can count on having their assets under custody situated in the most secure place in the world.”

In an asset class that has faced hurdles in various locations worldwide, the soundness of the Swiss financial marketplace and its open-minded regulatory regime has undeniably made the country one of the most favourable environments for the development of digital assets. The Swiss Financial Market Supervisory Authority (Finma) recognises the innovative potential of new technologies for the financial markets and recently issued its first licence for a digital securities trading infrastructure.

“Switzerland is one of the most advanced crypto countries in Europe in terms of regulation and crypto acceptance,” says Mordelet. “The regulatory setup is clear and well anchored.”

Benefiting from this regulatory certainty, Swissquote became the first Swiss bank regulated by Finma to offer cryptocurrency trading – for both its retail and institutional clients – and the first bank in the country offering digital assets to become a regulated custodial bank.

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