Linum Labs AG is a Swiss-based company that aims to build decentralized systems towards a healthier society, with a focus on health and identity.
SEBA Crypto AG recently made waves by announcing its launch of a bid to become Switzerland’s first fully-regulated crypto bank – building a bridge between the fiat and crypto world.
Its CEO, Guido Buehler (formerly of UBS) shared his thoughts on the vision for SEBA and what it might mean for Crypto Valley in an interview originally published on Sionik.
Tell us briefly how the idea for SEBA came about…
Just like almost everything else in our world, money is going digital. When I pulled the SEBA team together in early February, I had in mind a new type of bank. A bank that bridges the gap between the old and the new economies and one that promotes the core values of Safety, Transparency and Performance. We are undergoing an economic transformation of epic proportions. Blockchain technology, the Internet of Things melding with the Internet of Money, the convergence of Cryptography, Computer Science and Economics – all of these technologies are enablers of the Fourth Industrial Revolution, which I and many believe is upon us.
Blockchain, also referred to as Distributed Ledger Technology (DLT), is about more than crypto currency or digital money. DLT is fundamental to securely storing physical assets in a digital format. By creating global, tamper-proof ledgers that authenticate ownership, assets such as securities, property deeds, artwork, jewelry and diamonds, personal identity documents and educational and other certificates of authenticity can be instantly validated, reducing the potential for theft and fraud. The proliferation of DLT is leading to the formation of new markets and innovative ways of creating value. This convergence of the digital and tangible worlds creates a significant need for a new type of banking paradigm. That’s why at SEBA, we are committed to redefining finance for the new economy.
If you could condense into one sentence – what is the mission of SEBA?
To be one of the world’s first universal, fully licensed and supervised crypto banks that will bridge the divide between traditional fiat and the new world of crypto.
You are aiming to obtain the highest level of banking license and yet many (most) refer to SEBA as a “crypto bank” – how do you reconcile these two aspects?
It is important to understand that FINMA doesn’t have a type of license that is specific to crypto banks. We are in contact with FINMA to apply for a Banking and Securities Dealer license. What this means is that we will be able to offer crypto AND fiat – transaction banking and all other services – all from one financial services partner.
Our ambition is to help our clients achieve exceptional performance in terms of wealth management and growth, within a supervised and regulated framework. In today’s newly forming economy, we must be able to offer these services across both crypto and fiat, because crypto is rapidly emerging as a desirable asset class. We would not be able to deliver on our promise without the highest level of banking license attainable.
Does Switzerland and the blockchain world really need a “crypto bank?”
We believe the world does need a crypto bank because today, there is no gateway for major financial investors that facilitates movement of assets between the crypto and traditional financial markets. The crypto market’s global and unregulated nature means that significant groups within the traditional markets, such as institutional investors, asset and wealth managers, and family offices exclude themselves because the crypto markets are perceived to be too risky and speculative. The existing KYC, AML and other applicable laws and regulations may flexibly be adopted to crypto markets, but the majority of large institutional investors, who have a moderate risk tolerance, exclude themselves because of the lack of regulated and supervised market participants.
It is our vision that SEBA’s supervised and regulated services will encourage wider participation and form a bridge between crypto and traditional financial markets.
A majority of your team (yourself included) come from UBS – is this a value add or a downside for your development and eventual work with the core crypto community?
It’s good for a headline but it doesn’t accurately reflect the diverse nature of our team. While some on our team have worked at UBS, Citi, Credit Suisse, Vontobel, etc, we also have security and technology experts from outside the banking world. And of course, we have deep expertise in the emerging crypto economy. We wouldn’t be able to deliver on our promise if we weren’t diversified outside the banking sphere.
The salient point to note is that everyone on the team has a track record for innovation and an entrepreneurial spirit, no matter what their background. We believe it is this combination of skill that is required to redefine finance for the new economy.
Much has been made of the trouble startups have in getting bank accounts in Switzerland. Is part of your mission to fix this? What does SEBA aim to offer blockchain/crypto startups?
Recent SBA indications are that blockchain businesses should be treated the same as other businesses. It is our ambition that to offer custody storage, transaction banking, trading and liquidity management, and crypto corporate finance services to crypto/blockchain companies funded in crypto currency.
Let’s imagine for a moment that SEBA fails to obtain a banking license – will the project have been in vain? Is the value of attempting this as big as actually achieving it?
The world is changing, and I believe that all financial institutions know that crypto assets will eventually become part of investment portfolios, and a new manner of storing and creating wealth. We intend to obtain one of the first truly universal crypto banking licenses so we can deliver an incredibly important infrastructural piece of the crypto economy. Our efforts will not be in vain!
Can you tell us where the name “SEBA” came from?
We chose the name SEBA because it transcends geography and languages, it is feminine and masculine, to us it represents the ying and the yang. It speaks clearly to our ethos to kill the duality between crypto and fiat.
From your current position, what advice would you give to incumbent banks (i.e. UBS, Credit Suisse etc)?
I’ve no need to advise any banks, they have their own intentions and plans with regard to the digital economy. Our ambition is to serve the wider banking economy, serving crypto companies, institutional investors, professional investors and even banks if they decide they need a gateway into the crypto world.
What are your impressions of the Crypto Valley ecosystem? Where do you think it is headed in the next 9-12 months?
SEBA is honoured to be part of the Crypto Valley ecosystem. We may be perceived as old bankers, but this is the true meaning of the merging of the traditional and the new economies. Old meets New! We are financiers, bankers, traders and security experts with a team of blockchain experts and world-class technology partners who are building a bridge between the traditional and new financial economies. The Crypto Valley ecosystem can only benefit from such a bridge.
In this year’s early summer days, the Swiss Federal Tax Authorities (SFTA) has responded for the first time – after lengthy internal consultations – with a draft practice circular to the pressing issue of the treatment of crypto businesses and transactions such as ICOs and TGEs for Swiss value-added tax (VAT) purposes. Although it has been a first move into the right direction, the draft practice circular leaves a fair amount of questions and uncertainties which will remain until the final text has been confirmed by the SFTA. Hence, an impressive amount of comments has been submitted to the attention of the SFTA (incl. several members of the Crypto Valley Association Working Group Tax / Accounting / Structuring [CVA WG TAS]) to ensure the viewpoints of the crypto community are properly understood.
Nevertheless, business must go on and start-ups need to deal with such VAT uncertainties in an appropriate manner. Given the fact that unknowingness does not protect you from sanctions, it becomes necessary to smartly document the internal VAT and risk assessment of such VAT uncertainties.
A plausible option could be to supplement your accounts with a write-up of your internal considerations and reflections whether you see a VAT liability accruing or not from your business activities. Such documents and policy help proving a best-efforts approach once the final text of the VAT practice will be enforced. By not proactively acting upon these VAT uncertainties, there is a certain risk that the SFTA might interpret such behavior as being ignorant to the rule of law and could subject you to adverse VAT effects.
The Crypto Valley Association Working Group Tax / Accounting / Structuring and its members are available in case you look for professional support:
The Western Switzerland Chapter of the Crypto Valley Association is glad to welcome Aires Marques as new co-chair to help further the expansion of the ecosystem in Swiss Romandie.
Until recently Aires, whilst a Senior Principal Blockchain Consultant at Oracle, oversaw the coordination of the Romandie Chapter of Toastmasters.
Special welcome to Aires!
Swiss Bankers Association – with support from the Crypto Valley Association – has developed guidance for Swiss banks opening bank accounts for crypto & blockchain companies.
The Crypto Valley Association (CVA) welcomes the issuance of new guidance from the Swiss Bankers Association (SBA) to its members, regarding the treatment of blockchain-based companies in the country. The new guidance directed to member banks of the SBA is intended to provide increased clarity and assurance and remove barriers to the growth of the Swiss blockchain ecosystem.
The guide, an initiative of the SBA and developed with the input and assistance of the CVA Regulatory Working Group, makes key distinctions between blockchain-focused companies seeking to raise capital through an Initial Coin Offering (ICO) and those who do not. According to the outline, companies which do not fundraise through an ICO should be treated no differently than regular Small Medium Enterprises (SMEs). Further distinction regarding documentation needed is made between ICOs carried out with fiat currencies and those using cryptocurrencies. The guide has been welcomed by FDF, the Federal Department of Finance, and FINMA, the Swiss Financial Market Supervisory Authority.
Oliver Bussmann, President of the Crypto Valley Association, welcomed the announcement, saying “We have seen a lot of positive growth in the ecosystem over the past 18 months and now it was very important that the SBA, CVA and authorities could come together and successfully work on a solution that can ease some of the restrictions that could hamper the continuation of that growth.”
Dr Mattia Rattaggi, who chairs the CVA Regulatory Working Group, added, “This guide is an important and timely contribution. As a multi-stakeholder organization it was important for us at the CVA to bring a diverse range of perspectives and expertise to the table for the development of these guidance and we hope that it will benefit the healthy advancement of the crypto/blockchain industry in Switzerland.”
Switzerland has gained a world-wide reputation as a popular destination for crypto and blockchain companies. In 2017, four of the ten largest ICOs were conducted in Switzerland. In 2018 the country continues to rank among the most attractive places for blockchain companies.
Read the SBA announcement here.
The past few years have seen Zug become more and more well-known not only for the multi-national companies that resort to the medium-sized Swiss canton for tax relief, but also for its vibrant crypto scene.
What started as a place to safely and securely conduct an ICO (in the style of Ethereum and others) has blossomed in to veritable mecca for crypto explorers and others who are anxious to make connections with the international community gathering in Zug.
Now there is a (short) guide to help curious blockchain entrepreneurs get a taste of where to go and who to know in “the Valley.”
This is the first in a series of “Personal Views” – short interviews with people of interest in Crypto Valley, sharing their views, experiences and perspectives on living and working in this unique ecosystem.
Ian Simpson (CVA): How did your team come together to work on Aragon?
Luis Cuende: Aragon One, the first team working on the Aragon project, has expanded from just 2 people (Jorge and me) to 13 now, but we have always been very careful about the team members we invite to our family. Some of them were community members, some of them were in the crypto space before, and some of them are even new to the space!
As a really early stage project, what were the things you needed, the “holes” where you said “Hey – we need someone to help us on this?”
Well, most of Ethereum infrastucture is very early, so we felt that way a lot of times. However, we had to build a lot of that ourselves, hoping that other projects can use all that infrastructure instead of creating from scratch.
Why did you decide to move to Crypto Valley?
It was a mix of reasons and there’s more info at https://blog.aragon.one/aragon-zug-f4d7aaff15e1, but basically right now Aragon needs a jurisdiction where the regulators and the government makes things easy. Zug has been so welcoming and the people here understand that crypto can help Switzerland keep progressing as a society based on privacy and freedom.
Aragon is about decentralized organisations. What are the qualities that make a decentralized organization strong? Why does the world need them?
One of them is the decentralization of power. Centralized power corrupts, as shown by history a lot of times. Decentralizing it out opens the door to running fairer societies all across the world. It also has benefits in the individual scale, for example allowing individuals in oppressive governments or institutions to speak up and organize themselves without being in a disadvantage with other individuals. With Aragon, a kid in Venezuela has the same tools to create value than a Stanford graduate.
You aren’t Swiss, but being here and hearing as people talk about “Crypto Nation” Switzerland – do you think this is what is needed? Or should countries and nations stay out of trying to be “the” country?
Well, I don’t think they can stay away from it. Crypto is a tool that will completely reshape society. As a part of reshaping society, they will also reshape government, commoditize it and flip the relationship with their citizens. Switzerland, and especially Zug, is very well positioned to be the crypto jurisdiction. This will obviously create jurisdictional competition with other places, but that can only lead to a race to create better governments that work for the people, and not the other way around.
Do you think blockchain technology by itself is capable of enabling fulling decentralized organizations…or does it have to be combined other systems, some centralized etc to work best?
Fully decentralized works best! Decentralization needs openness, free software, community governance… having one of those without the other doesn’t make much sense.
You made the statement at the Crypto Valley Conference that since you were born in ’95 you had no way of comparing the growth of blockchain to the internet boom – do you think this “ignorance” or lack of experience is a good thing? Does it make you free to experiment more?
I think so. We have to find a right balance between freshness and experience, but I definitely think that not having a lot of bias of how things used to be done is very positive for this revolution. Most of the times you cannot draw parallels because it’s too different.
Where will blockchain be in 5 years?
Blockchain is… (10 words or less)
An immutable shared source of truth powered by game theory
The past week saw more action here in Crypto Valley – more so than usual.
For the third time in less than six months, Zug played host to a major blockchain event. After the successful Crypto Valley Conference in June and the equally well-attended Blockchain Summit in April, the Theatre Casino welcomed Tech Crunch and wide array of well-known names in the blockchain and crypto world.
Those names included Binance founder Changing Zhao, Consensys founder Joe Lubin, Galia Benartzi of Bancor and Crypto Valley’s own Mona El Isa of Melonport.
And then there was Vitalik Buterin – along with a strong contingent of the Ethereum Foundation, one of the main catalysts behind the birth and growth of the Crypto Valley ecosystem to begin with.
Burn in hell
It was, of course, Vitalik who provided the highlight quote of the event by declaring, “I definitely personally hope centralised exchanges go burn in hell as much as possible.” – a comment that figured into a wider discussion about the values and challenges of running a decentralised organisation.
While the quote itself would have been a headline-grabber in and of itself, it echoed even louder coming on the same day that SIX Group, the owner and operator of Switzerland’s stock exchange announced its plans to build the SIX Digital Exchange (SDX) – a DLT-based end-to-end infrastructure for the issuance, trading and storage of digital assets, including tokenised securities.
Numerous commentators, many on Twitter, did not miss the irony of the two events happening simultaneously – nor did they miss the chance to deride the move by SIX as purely marketing.
Not so serious
However, the second day of the Tech Crunch gathering, which featured an Ethereum meetup hosted by the Ethereum Foundation, provided additional perspective on the centralised vs decentralised exchanges discussion.
In a panel discussion that included Coinbase CTO Balaji Srinivasan and Vitalik, the question was raised “How can centralised and decentralised exchanges work together?” In response, Vitalik admitted that the bridge from fiat to crypto remains a strong area in which centralised exchanges such as Coinbase have a role to play.
A complex future
Although the subject of centralised digital asset exchanges for tokenised securities did not come up, the point can be made that a future which includes tokenised securities and all manner of financial instruments bound to the blockchain will not happen overnight.
It is reasonable, therefore, to see projects such as the SDX as inherently important to the transition to a tokenised future, given that the weight of market incumbents will be necessary to maintain an even keel and encourage adoption.
Will decentralised exchanges ultimately snuff out their centralised counterparts? It is too early to say – and the future may very well end up being a patchwork mixture of both.
Popular sentiment will be strong to support Vitalik’s wish – and to push out those who exploit centralisation for obscene gains.
And it may just be enough to take us all to a decentralised heaven.