A billion-dollar investment by Tesla in bitcoin heralds a tectonic shift that banks are on the sidelines of. Traditional finance will pay a price for their technological and cultural hesitancy, finews.com editor Peter Hody writes.
Every finance chief, portfolio manager, corporate treasurer in the world faces the question this morning: what is our company doing in terms of investing in digital assets? They have Elon Musk's $1.5 billion investment in Tesla to thank for that – a bold bet marrying corporate banking with the burgeoning cryptocurrency world.
The seismic shift heralded by Musk's crossing the Rubicon carries implications not just for the relatively straightforward business of how companies invest, manage their cash and treasury, use digital assets in payments, digitize assets of their own, or include digital assets in building their investment portfolios.
The «big shift» spearheaded by blockchain technology underpins cryptocurrency's role in disrupting a monetary system and becoming a catalyst for the global economy. This is spurred by the ongoing effect of digitization and technology on the economy as much as demographic developments.
Tesla-Bitcoin-Singularity
In other words, the world's leading digital currency can no longer be relegated to a sinister corner of finance or the limited domain of computer nerds, crypto-anarchists, or fintech evangelists. Bitcoin has arrived in the boardroom of big global companies.
Silicon Valley, the new economy's breeding ground, is electrified about the «Tesla-Bitcoin Singularity»; an event that sets free almost unknowable amount of technology growth and promises no less than to alter the course of human civilization.
Bitcoin: Response To Monetary Policy
That is a lofty goal, but we dismiss it as a futuristic fantasy at our peril. Tesla is a manufacturer that is revolutionizing the automotive industry and will leave a lasting mark on mobility as well. Elon Musk is not just a visionary, but also a controversial, tough-as-nails, successful entrepreneur. Bitcoin is the first and until now most durable result of blockchain technology – and increasingly persuasive response to the misguided monetary policy of continual devaluation.
Whether the «big shift» or singularity event: banks – and especially in Switzerland, where the government and «crypto valley» have forged ahead – are at risk of missing out on this fundamental shift.
We know how Switzerland's traditional financial players dragged their feet in building a bridge to cryptocurrency-based finance, even if some banks are beginning to offer their private clients digital asset services.
Crypto For Corporate Clients?
This reluctant stance prevalent among wealth managers is just as apparent in the far less glamorous (or lucrative) business of banking for companies: few Swiss banks (besides newcomers Seba and Sygnum) are set up to offer their corporate clients any crypto or digital asset expertise in cash- or treasury management.
There are few to no established Swiss institutional asset managers which are building products on these promise these assets holds, and no institutional investors who have swung their investment policy with the shift. Until now, this conservatism was frequently excused with regulatory developments – from now on, it attests to backwardness.
The sluggish technological shift of Switzerland's financial center and specifically its banks and the hidebound mentality and culture in C-suites is about to get checked. The reality is simple: bitcoin and cryptocurrencies are part of the financial system, they just needed Elon Musk as their eye-opener.
