The former UBS executives of Swiss multinational investment bank raised $104 million this week to start the first regulated crypto bank. Launching such a fully licensed and regulated digital currency kind of a bank could prove just as vital as having a Bitcoin exchange-traded fund (ETF).
ETF Vs Bank
In the last nine months, even after the 80% correction of the digital currencies market and the drop in the price of Bitcoin by 69%, the cryptocurrency industry infrastructure has continued to strengthen at a very fast rate.
Coinbase and BitGo have been authorized by regulators in the United States (US) to run their operations as digital currency custodians, offering their services to institutional investors. Citigroup members, Goldman Sachs and Morgan Stanley have established products to help curb the growing demand for digital currencies from institutions and are now only waiting for a go ahead signal from the regulators.
A few days ago, Swiss financial services firm Seba Crypto AG, that is run by ex UBS Group AG officers won a megaround which is basically a funding round that more than a $100 million in value to launch the first cryptocurrency bank in the world.
Seba is expected to file an application with the Swiss Financial Market Supervisory Authority (Finma), the body in Switzerland that is responsible for financial regulations. Once Seba receives the banking license it is after from this body, it plans to raise more capital to ascertain that there will be enough funds to provide full protection to investors.
In terms of structure, Seba will run like a normal major bank such as UBS and Goldman Sachs. It will like these banks offer clients asset management products and investment banking services. Since it will now be a regulated bank, this organization will now handle fiat deposits and allow their clients to open savings accounts. Investors will, thus, be able to make both fiat and crypto investments.
According to Guido Buehler, Seba Chief Executive Officer (CEO) and the former UBS managing director, Seba’s vision is to have a platform in which clients can have both their crypto and fiat accounts in one online platform.
Following the Bitcoin ETF filings of big financial institutions like Cboe and VanEck in late 2018, the digital currency industry is now preparing itself for the approval and launch of the maiden Bitcoin ETF. New York Stock Exchange’s parent company ICE, revealed that platforms and ETFs such as Bakkt will enable investors to buy and sell digital currencies with their existing brokerage accounts. Such a move will culminate into cryptocurrencies becoming part of 401(K)s.
401(k) is a retirement savings plan for citizens in the US. It is usually sponsored by the employer and allows workers to save as well as invest a part of their wages before being taxed.
Seba basically works like an ETF. Investors are able to securely use their fiat cash from their accounts to invest directly into cryptocurrencies while receiving full protection from the system. The main difference between the two kind of investments is that ETFs can be traded on the stock market, but Seba processes the trades directly.
Infrastructure is Building quickly
Many companies in the digital coins industry like Bakkt, Coinbase, Gemini, Goldman Sachs, and others are all looking forward towards easing the process of accessing cryptocurrencies to allow the asset class of this industry to appeal to more investors.
Renowned Billionaire and hedge fund investor Mike Novogratz predicts that as the crypto companies continue to increase their efforts towards making the crypto market favorable to many, there will be a surge in new investors who will join this industry.