How To Meet The Increasing Demand For Digital Assets?

By Sander Laugs, Head Institutional Clients SEBA Bank

Increasingly, banks and other financial intermediaries receive client requests around the topic of digital assets. Frequently, the demand comes from clients who wish to stay with their trusted bank but would like to gain exposure to selected cryptocurrencies through direct purchase or ETPs.

At SEBA Bank, we have built a robust, complete turnkey solution for banks that are seeking a safe and easy entry into digital assets.

Where the digital asset space had a retail character some time ago, professional and institutional investors are now seeking instant access, as they have observed a strong outlook for performance and the obvious ability to diversify.

Multiple Options Available For a Variety of Needs: Highlighting Three Options

As a fully Finma-regulated Swiss Bank, SEBA Bank offers a full range of solutions to banks that are looking to provide opportunities in this exciting new asset class to their clients.

1. Omnibus Account

Banks can opt for a seamless set-up of an omnibus account with SEBA Bank, a proven and reliable setup that is already in use by several banks in Switzerland. Through this highly secure structure, SEBA Bank provides in-house storage of client coins/private keys segregated and off-balance sheets. Furthermore, we provide fully certified Hot and Cold custody solutions, as well as automated daily reporting of crypto positions and fiat transactions.

SEBA Bank has a 24/7 trading desk and acts as a market maker in Bitcoin (BTC), Ethereum (ETH), Stellar (XLM), Litecoin (LTC), BCH (Bitcoin Cash) and USDC (USD) Coin, and is continuously expanding its offering. Trading can be done through SEBAtrade, our  e-trading platform (with FIX API connectivity), e-banking or mobile phone.

2. Product Collaboration

Many banks collaborate with us on our dedicated digital asset products, which stand out based on the institutional-grade quality and the highly competitive price points. The products are structured in such a way that any potential counterparty risk is mitigated. This results in a secure and cost-effective alternative to holding coins directly at exchanges or other non-regulated entities.

It was a great milestone to have our ETPs listed on the SIX Exchange since the beginning of April. Our investment products provide investors with easy, secure and cost-effective access to digital assets and fully remove custody and security challenges that are often a concern to many clients entering this space. The available product suite consists of Bitcoin and Ether Tracker in USD, the first CHF currency-hedged Bitcoin Tracker in the market as well as the successful SEBAX Crypto Asset Select Index.

Highlighting the SEBAX® Crypto Asset Select Index, even just a 4 percent allocation to this diversified crypto basket can double the Sharpe Ratio of a traditional portfolio, which is a highly attractive value proposition for clients or discretionary portfolios.

3. AMCs / White Labeling

SEBA Bank is able to support banks that wish to set up their own crypto portfolio, e.g. an actively managed certificate or a fund. We are able to take care of the coin selection as well as the necessary asset- and risk management.

SEBA Bank offers a one-stop-shop for setting up actively managed certificates (AMCs), combining the use of our issuer vehicle, our principal trading operations and our institutional-grade custody solutions.

Digital Assets Provide Significant Diversification Benefits

The graph illustrates how a low single-digit allocation to digital assets can significantly improve the risk/return relationship of a traditional portfolio. A 4 percent allocation to Bitcoin improves the Sharpe Ratio by around half, while the same 4 percent allocation to the SEBAX® Crypto Asset Select Index roughly doubles the efficiency of the portfolio.

SEBA Bank Allocation Crypto Assets finews en 500x300px

Learn more about customized investment strategies for digital assets at SEBA Bank.

Sander Laugs has 15 years of relevant experience in senior roles in Wealth-, Asset Management and Trading. Before joining SEBA Bank as Head Institutional Clients, he was Head of Asia-Pacific at C2C in the Netherlands. Prior to that, he was Head of New Markets for Bordier in Singapore. Completing a total of ten years in Singapore, he also held various positions at Saxo Bank and ADS Securities covering the institutional client segment in Asia-Pacific and the Middle East. He started his career in institutional sales at Saxo Bank in Denmark. Sander holds a master’s degree in European Studies.