In the past, anyone wanting to buy cryptocurrencies had to set up their own wallet and turn to sometimes opaque crypto exchanges, which involved taking unpredictable risks. Nowadays, traditional banks also offer services for trading and storing Bitcoin & Co. What advantages does this structure offer?
From a bank's perspective, developing its own offering makes perfect sense. The demand for cryptocurrencies is high, and those who don't offer services will lose customers. However, from an investor's perspective, it can also make sense to trade and store cryptocurrencies at their home bank.
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The two big advantages
- Secure storage: First, cryptocurrencies and digital assets can be stored alongside traditional investments in a secure location. While self-custody may be attractive to some investors, the bank as a storage location offers an additional layer of protection. Furthermore, cryptocurrencies can be seamlessly integrated into traditional investment strategies, allowing for a consolidated and easily accessible overview of the entire portfolio - both digital and traditional assets. If the bank also offers additional services like staking, a "one-stop-shop" solution at a bank makes a lot of sense.
- Easy trading: Buying and selling cryptocurrencies is just as straightforward as trading traditional assets. Unlike conventional crypto trading, there is no need to transfer money to a crypto exchange beforehand to acquire digital currencies. This not only saves valuable time and effort but also potential transfer fees and reduces counterparty risks with opaque crypto exchanges abroad. This efficient handling allows investors to access the market quickly and cost-effectively without dealing with the typical hurdles of a new platform.
Additional considerations
Self-custody of cryptocurrencies requires extensive expertise and increases personal responsibility. Those who manage their digital assets independently act as their own bank. All security measures and protections typically handled by financial service providers must be taken and implemented by the individual. For example, in the case of inheritance, cryptocurrency estate planning is fully regulated and automatically set up with a Swiss bank. This is much more complicated for heirs with foreign crypto exchanges, and with self-custody, it is also possible to lose access to the cryptocurrencies. Knowledge, choosing the best crypto exchanges, and experience can reduce the risk of self-custody to some extent - but never eliminate it.
In such cases, it can make sense to rely on expert knowledge. When crypto transactions are handled by an established bank, professionals ensure both efficient trading and secure storage of assets. This is particularly advantageous for beginners who have little experience with cryptocurrencies. Additionally, banks have the advantage of being regulated and trusted institutions that implement strong security measures. Cryptocurrencies stored there are generally better protected from hacking and theft.
Don't forget about taxes
Finally, cryptocurrencies stored by banks also appear directly on the asset statement. This greatly simplifies tax reporting, as all relevant information is clearly and transparently listed. Additionally, these assets are off-balance-sheet in Switzerland, meaning they are not part of the bankruptcy estate in the event of a bank insolvency. This structure significantly reduces the risk, which is not the case with many specialized crypto exchanges.
