Epicenter brings you our conversation with Dr. Luka Müller, a Founding Partner of the Swiss lawfirm MME. In 2014, he helped the founders of Ethereum structure its crowdsale and create the Ethereum Foundation. Now, Luka believes the lack of a banking layer in crypto-finance has hindered the industry, so he’s gone on to create Sygnum, the world’s first crypto-asset bank.
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Dr. Luka Müller has been behind the scenes, yet instrumental, in establishing Switzerland as a center for cryptocurrency projects. As one of the founding partners at the Swiss law firm, MME, he has advised many crypto companies and helped a few of the most well-known projects conduct crowd sales; including Ethereum, Cosmos, and Tezos. Luka’s legal work has given him unique insights into the industry and has helped him to understand the services, technologies, and issues hindering the growth of crypto-assets.
Entrepreneurship runs in Luka’s family and his entrepreneurial drive is once again reaffirmed with his latest project, Sygnum Bank. Luka co-founded Sygnum because the existing financial infrastructure is inadequate to facilitate the digitization of assets and assist those who wish to invest in them. The new world of crypto-finance will need to coexist and interact with legacy infrastructure for the foreseeable future. It is this touchpoint where many of the inefficiencies occur, often resulting in a multi-day process to buy cryptocurrency via fiat currency.
Sygnum aims to become the banking layer for crypto-finance with the ability to receive, hold, and transfer digital tokens securely. Many assets will likely be tokenized in the near future, meaning ownership of these crypto-assets will be determined via a digital bearer instrument. While many crypto-enthusiasts think that each individual should be in full control of their private keys, it’s apparent that for certain people and use cases, an asset manager or bank may be a necessary part of the equation.
While Sygnum marks the first regulated “crypto bank,” with FINMA’s conditional banking license issued in late August, there is stiff competition in the space from a variety of companies offering services quite similar in nature. Since the approval of Sygnum by regulators in August, SEBA has also been approved and licensed in Switzerland and intends to be a seamless, secure, and easy-to-use bridge between digital and traditional assets. Swisscom and Sygnum have teamed up to create a suite of services that will allow them to offer custody, issuance, and various banking services to clients. Such services sound like they will be competing is a crowded marketplace of custody providers that include BitGo, which reports over $2 billion under custody, Geman banks, who’s latest regulation, enables them to sell and custody crypto-assets, and many others. It’s reassuring to see such focus in the industry, for I believe such infrastructure providers are necessary to facilitate the onboarding of larger institutions wishing to operate and invest in the space.
As many consider the bull run in 2017 was the result of retail investors speculating in crypto-assets, there were inadequate service providers (namely insured custody solutions) and unclear regulations that prevented many institutions from joining the upswing. It’s exciting to see competition heating up with services that are vital for traditional finance to deal with crypto-assets. The competition demonstrates continual maturing of the space and indicates the once-fringe movement is garnering the attention and investment of some of the biggest names in finance. Even with such services in operation, there is still a lot of room for advancement of regulation. Switzerland is a relatively small country that bowed to international pressure to reduce banking secrecy in the past. While Switzerland has thus far been kind to crypto-finance projects, regulatory clarity must progress in many markets around the world to ensure a sustainable and long-lasting future.
