'Inundated with requests': Digital currency firms look to Swiss banks after crypto-friendly lenders fail

The Key Points

Companies are looking for Swiss banks because of the country's regulatory environment that is open to cryptocurrency companies.

After the collapse of Signature Bank, Silvergate Capital and Silvergate Capital, which were both lenders that were open to digital currency companies, crypto firms are now looking for institutions to bank with.

According to multiple industry insiders speaking to CNBC, some of these companies have turned towards crypto-friendly Swiss banks to get banking services.

The crypto industry has had difficulty accessing banking services from traditional banks. They don't want any transactions that aren't within a clear regulatory framework. This includes crypto and blockchain firms. They have had to turn instead to specialist banks.

With SVB and SVB out of the picture, crypto firms have turned their attention to Switzerland, who has tried to position itself as a cryptocurrency hub with solid regulation.

"We have been overwhelmed with requests," stated an advisor at a private Swiss bank. He preferred to remain anonymous because of the sensitive nature the matter.

According to the advisor, more private lenders had requested money in one day than any other after Signature Bank and Silvergate Bank's winddown earlier this month.

The advisor stated, "It's just nuts."

Despite turmoil in the Swiss banking industry after Credit Suisse was on the verge of collapse, the enquiries have continued to come despite the fact that UBS eventually bought Credit Suisse in a deal that was mediated by regulators to stop the spread to other lenders. Although the episode has damaged Switzerland's reputation for being a financial hub, it has not stopped crypto companies from investing.

Advisor said that the "problem" is still present in terms of crypto-firms still needing banking services. He also stated that people see the Credit Suisse incident with a single bank as an "unfortunate single threat".

Non-European firms in the United States look to Switzerland

Sygnum's chief marketing officer Dominic Castley said that Sygnum is experiencing an influx in enquiries. Sygnum is one of Switzerland’s largest banks and is focused on digital asset companies.

Castley stated that Sygnum's locations in Singapore and Switzerland have seen an increase in international onboarding inquiries over the past weeks due to current events in the banking industry.

Sygnum holds a Swiss banking license, and a Singapore capital markets services license. This brings it under the control of regulators.

A Swiss-based advisor to financial tech companies said there has been "a lot of inflow from U.S. clients" to Swiss banks.

A European trading company executive said that their company has been receiving inquiries from non-European entities to establish new banking relationships. Due to the sensitive nature the topic, the executive requested anonymity and said that these firms included venture capital firms and crypto-focused hedge fund managers.

Castley stated that interest comes mainly from "investors, asset managers, and blockchain projects looking for diversification in crypto investments with a trusted Swiss partner such as Sygnum Bank."

CNBC reached out to SEBA Bank, the other major lender in Switzerland that deals with digital assets. They did not respond when CNBC asked them for comment.

Switzerland's crypto-friendly stance

Companies are looking for Swiss banks because of the country's regulations that are welcoming to crypto firms in search of stable operating environments.

The country has established what the locals call "Crypto Valley", just outside Zurich, which is home to both start-ups as well as more established digital currency companies.

The government issued a regulation in 2021 on companies that use "distributed electronically register technology" (or blockchain) to regulate their activities. This regulation was inspired by the cryptocurrency bitcoin, but has evolved over time.

CEO of AgAu.io in Switzerland, Thierry Arys Ruiz said that Switzerland is more stable and has "more certainty about what the rules are".

An anonymous advisor from a private Swiss bank stated that companies are moving to Switzerland in order to be in a safer jurisdiction for crypto regulation.