Julius Baer braves crypto ‘bubble-burst’ moment

Julius Baer Group Ltd is working on offering services in digital assets to its wealthy clients, and sees the current turmoil in global crypto markets as potentially defining moment for the asset class.

Julius Baer wants to place itself at the intersection of digital assets and the fiat world, according to a statement on the private bank’s updated strategy yesterday.

Pilot programmes are currently in place with an eye to offering advice, trading and investing in cryptocurrencies to its rich customers.

“It could well be that at this very instant we are witnessing a bubbleburst moment of the crypto industry, and we all know what happened after the dot-com bubble burst 30 years ago,” chief executive officer Philipp Rickenbacher said during a presentation of the bank’s strategy to investors.

“It paved the way for the emergence of a new sector that indeed transformed our lives; I believe digital assets and decentralised finance hold that same potential,” he said.

Julius Baer’s shift toward offering crypto services is in stark contrast to Zurich rival UBS Group AG, one of the world’s largest wealth managers which so far has said it’s not interested in advising clients on “speculative” assets.

Julius Baer has taken a stake in SEBA Crypto AG, one of the two fully-regulated crypto banks in Switzerland.

It said when investing in SEBA in 2019 it was “convinced” that digital assets — a catch all term for cryptocurrencies, blockchain technologies, tokenised assets, and non-fungible tokens — would become a “legitimate sustainable asset class of an investor’s portfolio”.

The relationship with SEBA has allowed Baer to refer clients seeking exposure to crypto-related investing and trading without the bank developing out its own infrastructure for custody and risk-management of the asset.

Julius Baer plans to develop its own research to clients on crypto, DeFi, and blockchain and ultimately provide regulated advice on investing and trading in the asset class, and the platform for them to do so at the bank.

The pilot programmes concern token booking, trading, and compliance to test and learn, and develop the vocabulary around digital assets.

So far global banks been wary on engaging with the emerging asset class, which is still perceived as too risky and inadequately regulated.

Banks are also required to hold high amounts of capital for every cryptocurrency they hold on their balance sheet, making doing business in the asset class costly.

Jamie Dimon, JPMorgan Chase & Co CEO, said at the annual shareholder meeting on Wednesday that the bank was working with regulators on clearer rules around crypto.

Rather, traditional finance has looked at the emerging technology applications that have come with the creation of blockchain and crypto coins.