Bilanz Magazine Interview with Dr. Arthur Vayloyan
1. For a long time, you were considered the prototype of the classic banker. You worked for Credit Suisse for 20 years and headed Private Banking Switzerland, among other things. And now Bitcoin. How did this change come about?
It’s true that I spent most of my career in the traditional banking business with private clients. But I have always been interested in topics that were new and perhaps still unusual at the moment, and that I wanted to open up for myself and for clients.
2. For example?
At Credit Suisse in 2003, for example, it was the then emerging topic of microfinance that fascinated me. The question of how to use microcredit to fight poverty in different regions of the world and how to build this into a functioning business model for the bank. I had to push the microfinance initiative through against a lot of internal resistance. I was ridiculed, and there were also people who said: “Only over my dead body”. (laughs).
3. And how did you get involved with Bitcoin?
After my time at Credit Suisse, I took some time off. At the beginning of 2016, at a retreat on mount Rigi, one of the seminar participants drew my attention to the topic of Bitcoin. My intellectual curiosity was aroused and my advantage was: I had a lot of time back then. The more I read about it, the more interested I became in the whole concept — despite its downsides. When my former boss at Credit Suisse, Walter Berchtold, brought me to the private bank Falcon at the end of 2016, I decided to implement my findings: Falcon was the first private bank ever to offer direct Bitcoin investments to its clients.
4. Scepticism about Bitcoin is widespread, the price fluctuates enormously, the currency is considered a means of payment for shady deals, there are fraud cases again and again.
It seems important to me to really look into the subject, to try to understand it before forming an opinion. In the financial industry, I still too often encounter the reflex: “I don’t understand it, that’s why I’m against it”. I think that is short-sighted. Of course, there are disadvantages and caution is indeed appropriate — there are some dubious players in this field. But digital currencies will be indispensable in the future, I am convinced of that.
5. This year, bitcoin has really taken off, the price has risen by over 150 percent. One feels taken back to the time of the last hype in 2017. Why this upswing?
It has to do with the sheer number of people who are now turning to the topic. The current surge has a different quality than the one three years ago. An increasingly broad group of investors is involved in Bitcoin and the professionalism and financial strength of the participants has increased — large institutional investors, external asset managers, family offices and external asset managers are all involved — for many, digital currencies are now an additional asset class with which they supplement their portfolio. Such investments have ceased to be of interest only for a few crypto-nerds. Media coverage has also become more objective and generally more positive.
6. Corona has not played a role?
Yes, it did, but rather indirectly: The applications of digitization and their impact on business models have rapidly gained in importance. Covid-19 has given many doubters and restrainers wake-up call, removed hurdles and thus provided an additional boost. Bitcoin has also benefited from this.
7. At the time we are having this conversation (1 December), the bitcoin price is just below 20,000 dollars. Will it pass the barrier by the end of the year?
There will probably be strong fluctuations — as there have been in recent months — and the 20,000 barrier will probably be tested hard. But once it is passed, it will continue to go up in the long term. The current, very rapid rise is not only positive.
8. In what way?
Because it is also attracting many more speculative investors. Although great volatility has characterized the price development of cryptocurrencies since the beginning, we see Bitcoin or the recently launched Ethereum 2 as important investment instruments or genuine decentralized financial infrastructure in the long term and not simply as speculative objects. However, a more cautious development would be desirable.
9. Many who were early adopters have become rich with digital currencies. Do you yourself?
I invest a fixed amount in digital currencies every Friday at the same time. Many experts also recommend a similar regular investment in shares, because this way you can profit from the long-term increase in value apart from all the ups and downs.
10. When and at what price did you start?
At the end of 2016, when the Bitcoin was at around 960 dollars. Since then, the price has increased about twentyfold.
11. How much do you invest?
I don’t want to name the exact amount. I invest regularly, but manageable amounts. I studied physical chemistry, and in the laboratory we also experimented with dangerous substances like cadmium or mercury. The principle was: controllable doses, so that when things go wrong, you don’t get yourself killed. This idea is probably also advisable for personal behavior in financial investments.
12. What does it take for the next quantum leap in digital currencies?
We would be very happy if the Swiss National Bank would bring itself to invest part of its reserves in digital currencies instead of gold. So far, the SNB is only indirectly invested in Bitcoin, via shares in companies that in turn hold such assets. I think the established players in the financial sector will sooner or later not be able to avoid opening up to these modern developments.
13. Bitcoin Suisse was founded in 2013 and has grown from a 5-person flat share to a company of over 175 employees. The growth course is expensive. Where does the money come from?
This summer, we closed an important financing round. Until now, the founders around Niklas Nikolajsen and the employees were the shareholders, now around 100 new ones have joined. Our equity has grown by CHF 45 million to CHF 100 million. Our business model has been profitable for many years. However, we see many interesting growth opportunities. To take advantage of these, we need more capital. If the journey continues like this, the next step should be going public. One of my tasks as CEO is to make Bitcoin Suisse “IPO-able”.
16. When will that be?
We currently assume that such an IPO could take place in 2023. But of course that also depends on what happens on the markets.
Originally published at https://www.bitcoinsuisse.com on December 18, 2020.
