In an interview with finews.asia, the head of the crypto bank discusses his plans, the market crisis and the sector's links to the Ukraine war.
Franz Bergmueller, you have led Seba Bank since April 2022. What are the largest obstacles that you have encountered?
The environment was certainly challenging from the outset given the Ukraine war, the energy and climate crisis, inflation, and financial market uncertainty. But the general conditions offer Seba significant opportunities.
In the last five months, I have noticed that we have excellent employees and that the bank has solid fundamentals from which we can expand our product and service offering.
They are?
We bridge the gap between the traditional and the new. More concretely, we offer crypto services for banks and on the other side we provide banking services for crypto providers. One of our greatest assets is that we are one of the few regulated crypto banks. The demand for more regulated conditions in digital assets and that of a specialized bank have grown tremendously in the last few months.
«The current situation is challenging but not worrying»
Is your management team complete?
We have a fully functional team. But fluctuation is normal in a startup like Seba, which is active in a highly dynamic environment. Change is a constant in our sector.
Is the current situation in the crypto markets anything to worry about?
The current situation is challenging but not worrying, both for Seba Bank and the crypto markets. Digital assets are still relatively new, and it is normal that the market periodically corrects, just as it does for equities and bonds.
Has there been any loss of trust by private and institutional investors?
Serious investors are increasingly interested in crypto but one has to understand exactly what digital assets are and how they work. Something that helps the sector overall is the acceptance we are seeing from financial institutions such as Goldman Sachs, Morgan Stanley, Schroders, and BlackRock. They were skeptical at the start but are now buying digital assets or increasing their investment in blockchain.
Is the current crypto winter impacting Seba Bank's performance?
I don't like talking about a crypto winter. For me, it is a cyclical correction such as we see with all asset classes.
«The fundamental idea behind blockchain is to link specialists with the traditional banking world»
We do not disclose results, but I can assure you that we have enough means at our disposal. Our trading performance has been good, and we reached a record in May. On the other side, the number of tokens held in custody has risen.
You announced a cooperation with LGT Bank in May. Is it exclusive?
We are extremely happy with our partnership with them and the confidence they have in our expertise. Our services are open to other banks. The fundamental idea behind blockchain is to link specialists with the traditional banking world.
You opened an office in Abu Dhabi in February. Do you have other expansion plans overseas?
We opened our office there at just the right time as the market for crypto, digital assets, and NFTs is booming there. We already have a foothold there and we are very happy. We are in the process of opening offices in Singapore and Hong Kong, which are also markets that have a high acceptance of crypto. What is important is that we become global.
«We are probably not the main bank or brokerage for traditional investors, but an additional complement»
Where will Seba be in five years?
It will continue to bridge gaps. New digital asset classes will be increasingly accepted by traditional players. We intend to have an active role in the market's future, showing investors and clients the way in a highly dynamic environment.
Do you think that Switzerland is building a world-class cluster in the crypto valley?
There is a unique ecosystem here in Switzerland. The future-oriented regulatory perspective is helped by the stable political and economic framework, excellent infrastructure, and education. All of them play an important role.
The ecosystem is very innovative when it comes to digital assets. Increasing numbers of institutional investors create more startups that then develop new services and products, helping Switzerland to keep its pioneering role.
Won't be we overtaken?
Swiss policymakers and regulators have recognized the importance of this new blockchain and crypto cluster. I think it is good that Switzerland creates a clear framework for everyone. That will ensure a permanent source of innovation.
«Sustainability is not only about energy»
But we can't rest on our laurels. Both Asia and the Middle East are developing quickly. The policymakers and the regulators are not sleeping. And the US is thinking publicly about how to adapt to crypto.
How important is regulation for the fintech sector?
We are one of two banks worldwide that have received a license from a known and established regulator, Finma. That was a milestone for us and Switzerland. We received clear directives from them and are comfortable with the way that we are working together.
That is also how we see the government, parliament, and other supervisors. They are curious and open to blockchain technologies and fintech in general. The work has been constructive, and everyone understands the quick pace of the industry's development.
Are sustainability and crypto compatible?
Ethereum is coming out with a software update, the so-called merge, which gets very close to ESG standards, and which will help to attract new investors. Sustainability is not only about energy. All the protocols are working to cut electricity consumption. Miners are also working according to certain operating criteria. If electricity prices rise due to fossil energy sources, then alternative sources are used to create cryptos.
«Crypto can help reduce poverty»
Sustainability is also about meeting the UN's targets. The rise of cryptocurrencies gives a choice to people who do not belong to 20 percent of the world's most privileged populations.
Will Ether replace Bitcoin after the merge as the leading cryptocurrency?
Recent history indicates that Bitcoin's market share has fallen from 100 percent to less than 40 percent. This decline happened despite Bitcoin's rise. it shows that there is room for new coins and tokens that offer new possibilities.
Bitcoin is often called digital gold. What advantages does it have compared with the precious metal?
Bitcoin and gold have a great deal in common. There is a limited supply of both. They can't be manipulated and are accepted around the world.
«The Ukraine war shows how important cryptocurrencies are»
But there are differences. Gold is a physical asset. Bitcoin isn't. Gold has been present in one way or another throughout human history. Bitcoin a bit more than a decade. Bitcoin has the advantage that it can be divvied up into small pieces and is easy to transfer. If one believes that the future will become increasingly digital, then it makes sense to have Bitcoin as a form of gold equivalent.
Is Bitcoin a hedge for political risk and the loss of confidence in fiat currencies given lax fiscal discipline and the overly expansionist policies of central banks in the past?
A portion of the world's population lives under autocratic regimes or in societies that do not protect human rights, freedom, or private property. The decentralized characteristics of blockchain and cryptocurrencies are aimed at providing more freedom, more security, and protecting private property.
Cryptocurrencies are booming in many developing countries – not as a form of speculation but as a way to keep savings, transfer and receive money, buy goods, and make business transactions.
The Ukraine war shows how important cryptocurrencies are for refugees in an unstable, unsafe financial and banking system that is on the verge of collapse. It allows that to at least save some of their assets.
Franz M. Bergmueller started as CEO of SEBA bank in April 2022. The bank is located in Zug, at the center of the Swiss Crypto Valley. Before joining the bank, he worked as a management consultant for more than 30 years. He had also started two corporate fintechs and graduated from university with a degree in economics.
