For quite some time, the Banque Cantonale Neuchâteloise (BCN) was considered one of the most crypto-friendly state banks in Switzerland. However, in a turnaround, BCN will close its doors to companies involved in crypto trading starting June.
For years, crypto brokers like Bity used BCN as their house bank to connect to the fiat system. Now, the Cantonal Bank of Neuchâtel has asked some of its clients to stop trading in cryptocurrencies, according to the western Swiss newspaper Le Temps. Some crypto service providers currently see no alternative. This decision could be devastating for the ecosystem in the Romandy region.
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The end of a crypto-friendly decade for Neuchâtel?
Much like the canton of Zug, Neuchâtel has long been considered a pioneer in the blockchain sector. While Bitcoin Suisse laid the groundwork for the German-speaking side of Crypto Valley, Bity started as a Bitcoin exchange in the founders' home canton in 2013. As was common for crypto startups at the time, establishing a banking relationship proved complicated. More than a year later, with the support of the canton, the Banque Cantonale de Neuchâtel (BCN) decided to host the exchange, despite its previous refusal.
Subsequently, a best practices guide was created to enable other companies to develop crypto services. This facilitated the creation of an ecosystem at a time when companies in the sector were always met with skepticism. With around 70 blockchain companies, Neuchâtel is still considered an above-average attractive canton for the industry. The affected crypto service providers fear a negative shift following the BCN's change in strategy.
Costs outweigh benefits
Previously, customers of crypto brokers such as Bity could convert their cryptocurrencies directly into Swiss Francs. The service provider took care of customer verification to prevent money laundering (KYC/AML). However, the Neuchâtel Cantonal Bank no longer wants to act as an interface for such transactions. Based on new risk analyses, the BCN has come to the conclusion that in order to effectively prevent money laundering, it must also verify the origin of the funds, as communicated to CVJ.CH by the Cantonal Bank of Neuchâtel upon request. This would entail considerable additional work for the bank, for which it currently has insufficient resources. As a result, the BCN will no longer offer its services to the crypto brokers it previously served.
"Our processes are constantly evolving, and this is not the first time our bank has changed its approach in an area. The regulatory framework for crypto assets has become clearer. This is good news for activities that tick all the boxes, but bad news for companies that don't meet the conditions." - Pierre-Alain Leuenberger, Director General of the BCN, in an interview with Le Temps
BCN's change of direction contrasts sharply with the launches of some cantonal banks in German-speaking Switzerland. The cantonal banks of Zug and St. Gallen have been offering their clients cryptocurrency trading and custody since last year. The Luzerner Kantonalbank will join them in the coming months. Therefore, BCN's retreat comes as a disappointment to crypto enthusiasts in French-speaking Switzerland.
