A current take on crypto, the security of our clients’ assets, and where Bitcoin Suisse stands amidst turbulent markets
Aug 4, 2022
In conversation with Verena Schwarz
1. Andrej, you are one of the co-founders and the Chief Client Officer of Bitcoin Suisse. Since you co-founded the company in 2013, you have come a long way – what are your thoughts on the current market situation and where does Bitcoin Suisse stand?
What is happening right now is a natural market correction that is typical for bear markets. The ecosystem consolidates and becomes more professional as a result. We have seen this in the past, with some players being washed out and stronger players coming out more robust than before. In my experience, especially in times where there are disruptive macro-economic forces like now, the absolute focus must be the relationship with our clients.
At Bitcoin Suisse, we are constantly in close contact with our clients, and it is my job to ensure that we are going the extra mile to bridge a potential information or general trust gap that might sometimes still be present in the crypto space. This becomes even more important during turbulent market conditions. Bitcoin Suisse’s business model follows a long-term and sustainable approach, and we always put our clients first, instead of aiming for short-term gains that could potentially harm our clients’ assets.
Beyond that, Bitcoin Suisse has a clear positioning as the Swiss crypto tech innovation leader and investment partner for our clients, and we are focusing on quality, stability, and security. We have been operational since 2013 and can look back on a solid and successful track record of almost 10 years spanning multiple crypto business cycles.
2. Bitcoin Suisse presented great results for the financial year 2021. The first half of 2022 started with several market downturns and a phase of lower prices for both traditional and crypto assets. What is Bitcoin Suisse doing to secure its clients’ assets?
The security of our clients’ assets is our highest priority, and we make sure that they are protected. This is possible thanks to our resilient business model which is built to provide our clients with a high-quality service, even more so during periods of intensified market volatility.
In its function as a crypto custodian subject to Swiss laws and regulations, Bitcoin Suisse holds client assets either in separated custody on a client-specific blockchain address or in collective custody. In the former case, client assets could be segregated in the event of a possible, but unlikely default of Bitcoin Suisse. In the latter case, client assets are covered by a bank guarantee from an AA-rated Swiss bank.
We have also built our own ISAE 3402-audited and institutional-grade custody solution, the “Bitcoin Suisse Vault”. With over 300 employees, we continue to focus on keeping our infrastructure secure and resilient in every way possible, and we invest further in our rock-solid fundament to get ready for the next growth phase.
Bitcoin Suisse is based in Switzerland, and we also see part of our role in driving the overall crypto ecosystem forward. It is great to see that Switzerland has recently created legal certainty with the Distribution Ledger Technology (DLT) Act regarding the qualification of crypto assets in case of the default of a crypto custodian, making Switzerland one of few jurisdictions with a clear legal framework in the interest of creditor protection.
3. You mentioned the proprietary custody solution, the Bitcoin Suisse Vault. How exactly do you store your clients’ assets in the Vault?
Assets stored in the Bitcoin Suisse Vault are held in cold storage on client-specific blockchain addresses and controlled directly by the client. The Bitcoin Suisse Vault is a proprietary, secure cold storage custody solution applying the highest standards of cryptographic, IT and physical security as well as multi-party-signing processes. Transaction authorizations enforce custom multi-person approval workflows and time delays based on our client’s unique requirements.
Could you give us more details about the setup of Bitcoin Suisse in the event of a third-party crypto exchange crash – do clients need to expect service interruptions in such a situation?
Clients of Bitcoin Suisse should not expect service interruptions. Our services are built on proprietary infrastructure and best execution trading across all relevant global crypto exchanges. This means that we are not bound to one exchange but rather that we operate across several of the most relevant exchanges globally.
This setup is part of our core offering and has proven to be extremely resilient, as it enables us to operate as usual even if individual exchanges are experiencing a downtime. It passed the test in May last year, when we were exposed to an unprecedented downturn which saw the price of Bitcoin drop by more than 22% within a period of only 45 minutes. Thanks to diversification across all relevant crypto exchanges, Bitcoin Suisse was able to remain operational and ensured that our clients could continue to trade.
We are continuously investing further in a more scalable and robust software and technology infrastructure to ensure that our clients can trade even in the stormiest markets. Additionally, we continue to partner with more exchanges to make sure that, even if multiple exchanges were unavailable at the same time, our clients would still be able to execute trades with the best possible market price, speed of execution, and minimal counterparty risk.
4. We are in the middle of a new “crypto winter” that could well continue for some time to come. How is Bitcoin Suisse preparing for such a situation?
Especially in the current market conditions, we need to take a step back and recognize that crypto is still a nascent industry that has already seen tremendous development over a relatively short time. Currently, there is clearly a wash out going on where some market participants will disappear. This is a well-known process in young industries with an entrepreneurial character. We have seen this before in the crypto ecosystem, and it also offers an opportunity for companies to come out stronger.
I believe that Bitcoin Suisse is one of the companies which will seize the opportunities of the market consolidation. We have a longstanding, largely self-funded and successful financial track record. With equity capital of over CHF 100 million, we are very well capitalized compared to other crypto financial services providers. I would like to emphasize that Bitcoin Suisse does not put client assets at risk to generate revenues for its own account.
That said, I have lived through several market downturns, with subsequent recovery phases mostly at an overall higher price level than before. As a company, we can build on two very strong previous years. Looking beyond the high volatility and low prices in summer 2022, the hashrate of the Bitcoin network is at an all-time high. Ethereum as second largest crypto currency by market capitalization is nearing the merge with successful testing. I believe that crypto is here to stay and the ecosystem is maturing and growing further. Basically, in such market phases, it is important to remain prudent, make careful decisions and take a long-term approach in the interest of our clients, shareholders and employees – this is what we are doing.
Please find further details on security at Bitcoin Suisse here.